Gap between home price growth in South and rest of UK to close, Hometrack says

Annual average UK city house price growth slowed in May, but increased during the last three months, the results of a survey showed.

Hometrack's UK Cities house price index revealed home price growth slowed to 5.1% per annum down from 8.8% in May 2016.

Nevertheless, the gap between the rate of house price growth in cities in Southern England and those in the rest of the country was set to narrow, even as the rapid slowdown in London home price inflation was showing signs of bottoming-out, the property website said.

South Eastern England experienced the most significant slowdown in prices over the past year, with the rate of price gains in London decreasing from 13% to just 3% and in Cambridge from 13% to 2%.

In Oxford prices fell by 0.6%.

Cities such as Birmingham and Manchester experienced the greatest upside due to growing economies and faster job creation, according to the report.

On the other hand, all cities outside of Oxford and Aberdeen saw higher prices over the last three months. Large regional cities- Birmingham, Nottingham, Manchester and Newcastle and other cities recorded the biggest price increase over the quarter.

Going forward, Hometrack predicted the gap between price increases in the Southern England and the rest of the country was set to close, although house prices in the capital were nearing a floor.

"We believe there is the potential for material upside in house prices outside Southern England," the property website said.

Since 2009 prices in London had shot higher by 85% while on Glasgow they had only risen by 12%, it explained.

Russell Quirk founder of eMoov.co.uk was of a similar view regarding the outlook for prices in London.

"Signs that the London property slowdown is soon to bottom out means that prices in the regions are likely to stay flat for the remainder of the year now".