Property values in 20 of the UK’s largest cities now eclipse the market cap of FTSE 100 giants

House prices in four of the UK’s biggest cities are falling in real terms despite prices values still rising, Hometrack data suggests.

The analytics and valuation firm’s latest UK City House Price Index, which charts values in 20 cities, shows that annual growth in Aberdeen, London and Sheffield was below the current inflation rate of 2.9%.

This means the rate of growth in these cities is failing to keep up with the cost of living inflation measure so is falling in real terms.

Aberdeen was the only part of the index to register a fall, with prices down 1.9% annually to £249,900. London growth has slowed from 10% last yaer to 1.9% in August at £489,100, while Sheffield prices were up 1.9% to £132,000.

House price growth across the remaining cities was ahead of the rate of inflation but has slipped from 6.6% last year to 4.9% in August, with average values at £249,900.

Manchester, Birmingham and Edinburgh lead the index with annual growth of 7.3%, 6.7% and 6.6% respectively.

The Hometrack research also looks at the total value of private housing in the UK’s top 20 cities, noting that it has passed the £3trillion mark for the first time, with 66% of the prices or £2trn coming from London.

The UK city with lowest valued stock of private housing was Aberdeen at £18.1bn.

To put those numbers into context, the entire market capitalisation of FTSE 100 companies stands at £1.9trn.

Richard Donnell, research and insight director at Hometrack, said: “House prices continue to rise on the back of sustained price inflation in large regional cities as unemployment falls and mortgage rates remain low.

“Weak growth in London is acting as a drag on the headline rate of growth. We expect this pattern to remain a feature of the market for the rest of the year and into 2018.

“The accumulation of housing equity from rising house prices means there is a major opportunity from innovation in financial and housing products to help households leverage or access housing equity.

“This is a complex and evolving market with consumer demands being shaped by demographic and economic change.”

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