House price inflation has reached a 12-year high in large regional cities outside the capital, but London has fallen into the bottom five lowest growth areas of the UK.
The latest Hometrack UK Cities Index shows that average prices in the top 20 cities of the UK rose by 3.5% in the first quarter of 2017 to £248,200, the highest quarterly rate for three years, which has pushed up the annual headline rate of growth to 6.4%.
However, London has seen house price growth slow to a five-year low with an annual increase of 4.9% to £490,100.
The capital has now fallen into the bottom five lowest growth cities, along with Cambridge, Oxford, Belfast and Aberdeen.
Manchester remains the fastest growing city with an annual growth rate of 8.8% to £153,600, while Aberdeen saw the steepest annual fall, down 8.7% to £173,300.
Richard Donnell, insight director at Hometrack, said: “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.
“This is shifting the dynamics of the housing market. Cities that have been driving house price growth over the last two to three years, such as London and Cambridge, are now seeing a significant slowdown, while large regional cities continue to register robust and sustained levels of house price growth.”
Meanwhile, the March House Price Index from Nationwide shows annual growth slowed from 4.5% to 3.5% since February to £207,308. This is below the annual rate of 5.7% recorded this time last year.
On a regional basis, East Anglia was the best performer on a yearly basis, with 10.1% growth to £216,687, while the North saw annual growth of just 0.1% to £123,397.