House price growth in cities in northern England and the Midlands is surging at levels not seen for 12 years, while growth in property values across parts of the South including London has slowed to the weakest rates in five years.
Hometrack, which tracks house price movements across the UK’s 20 biggest cities, said the dynamics of the housing market were shifting, as cities such as London and Cambridge, which had been driving price growth, were now seeing a significant slowdown.
Manchester continued to lead the way for house price growth in March, with values up 8.8% compared with a year earlier.
Belfast, in contrast, reported growth of just 2.9% while prices in the beleaguered Scots oil capital of Aberdeen were down 8.7%.
Hometrack said that in Manchester, Newcastle and Birmingham, annual house price growth had lifted to levels not seen in these cities since 2005. In Newcastle, house prices were up by 5.6% year-on-year and in Birmingham they had seen an 8% increase.
In London, Oxford and Cambridge had slowed to less than 5% for the first time in five years.
It said affordability pressures, as well as tax changes for investors, with a recent stamp duty hike for buy-to-let landlords, had constrained demand in these areas.
Relatively attractive housing affordability together with record low mortgages rates was helping to support demand for housing in cities outside southern England.
“Buyers outside the South of England appear to be shrugging off concerns over Brexit and a squeeze on real incomes to take advantage of low mortgage rates,” said Hometrack director Richard Donnell.
“This is shifting the dynamics of the housing market.”