House price growth in London reached a 5-year low of 3.3% in May 2017, down from 14% just one year ago, Hometrack’s UK Cities House Price Index has revealed.
Instead of London leading the way on yearly growth Birmingham (7.7%), Manchester (6.8%), Leicester (6.8%) and Nottingham (6.8%) were the fastest rising.
Despite the drop in the capital Hometrack predicted London house price growth bottoming out and maintaining a level of 2-3%.
Richard Donnell, research and insight director at Hometrack, said: “House prices in London have grown 90% since 2009 but growth in 10 cities has been below 30% over the same period.
“So long as the economy continues to grow, and mortgage rates remain low, we expect house prices to keep rising at a steady rate and close the gap to London.
“In London, where affordability is most stretched, house price growth has slowed rapidly in the last year on weaker demand and growing uncertainty.
“The annual rate of house price growth in London has bottomed out for now as turnover falls and supply tightens.
“We don’t expect year on year falls in our London index in 2017 but there are small price falls in localised markets, typically those with average prices of between £600,000 and £800,000.
“Given the uncertainty over the Brexit negotiations and the impact on the economy we believe that house prices will need to adjust further over the next one to three years to align with what demand is prepared to pay.”