House price gap between cities is still narrow

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The gap between the UK cities with the strongest house price growth and those with the weakest has shrunk to its narrowest levels in nearly 16 years, property analyst Hometrack has reported.

Cities across the United Kingdom such as Aberdeen, Edinburgh, Glasgow, Newcastle, Manchester, Sheffield, Cardiff and Birmingham are seeing the pace of house price growth start to catch up with that seen in places like London, Oxford and Cambridge.

The gap between the “best and worst-performing cities” is at its narrowest since February 1999, Hometrack said.

In part, the gap has narrowed because several cities across southern England, which saw a strong pick-up in house price growth in early 2014 as the strength of housing market recovery took many commentators by surprise, are now seeing a weaker rate of increase as demand from would-be buyers has cooled.

Meanwhile, those cities which were slower to feel the housing market recovery take hold are now seeing price growth heating up as confidence has filtered back into the market.

Richard Donnell, director of research at Hometrack, said the gap between cities in the pace of house price growth looked set to narrow further in the coming months as previously “high growth” markets continued to see a slowdown.

He said: “Mortgage approvals have weakened in the last five months, with a knock-on impact on house price growth.”