Written By Em

Hometrack’s May UK Cities House Price Index shows Edinburgh to have had a positive month, as it is leading the table with a growth of 7.1% to an average of £225,300. Manchester has followed very close behind, with a rise by 7% to £163,300.

Meanwhile, the index also shows annual growth in London to be at its lowest level in nine years. The annual growth of the capital is recorded to be at 0.4%, and, looking at other areas around the country, there are four other major cities that are also seeing prices fall in real terms. The data shows that Belfast, Oxford, Cambridge and Aberdeen have all seen returns below the 2.4% rate of inflation.

Hometrack insight director Richard Donnell has commented: “We expect house prices to keep rising across regional cities such as Birmingham, Manchester and Edinburgh over the next two to three years. During this time house price growth in London will remain flat with annual price rises of approximately 0-2 per cent.

“As a result, the gap between house prices in cities outside of the South East and house prices in London will continue to contract.

“Naturally, the relative price gap between cities fluctuates over the course of the housing cycle as supply and demand is affected by factors such as economic growth, job creation, wage increases and the flow of new investment.

“Hometrack expects that Manchester and Birmingham will close the gap to London fastest in the coming years as these cities are likely to see the strongest jobs growth.

“The level of house price inflation seen in large regional cities during the last peak, between 2000 and 2003, gives a good indication of how much prices may rise this time around. If history is to repeat itself and these cities are to get back to where they were, then prices could increase by as much as 20-25%.”

Land Registry data suggests a recovery for the property market as last month’s transactions witnessed an increase.

The most recent Land Registry’s Price Paid Data report, recording the number of sales lodged for registration, reveals that there were 77,166 residential transactions during May.

This figure increased to 6.7% in April but decreased to 4.2% annually.

Of all registrations that were received, in May, the Land Registry claimed that 21,349 occurred during the month.

375 of these were for residential properties in England and Wales for £1m.

London had most million-pound sales in the month at 215, while Birmingham and Manchester had one each.

The most expensive residential sale during the month was of a detached property in the Royal Borough of Kensington & Chelsea for £15.7m. The cheapest was for two properties in Rushden, east Northamptonshire, for £9,500.

The time lag at the Land Registry means it can take months for property transactions to appear, but the latest data reflects what many agents are describing as a topsy-turvy and unpredictable market.

Transactions filed to the Land Registry had dropped 27% between January and February, before increasing 5.3% in March and then falling 13.4% in April.