Fresh signs of slowdown at top of market

There is further evidence of a slowdown at the top of the market as the pace of house price growth in the UK's most popular cities appears to have peaked.

New figures published today show that 13 of the 20 cities tracked by the Hometrack Cities Index have registered a slower rate of growth post-election.

This follows figures last week that showed sales in prime central London are starting to fall due to high stamp duty and foreign buyers deserting the market.

City house price inflation is still running at 8.4% a year, up from 6.6% in May, but the growth rate appears to have plateaued over the last three months.

This follows a 20% drop in mortgage approvals in August.

Hometrack also predicts that house price growth will slow in the final quarter due to seasonal factors.

The average discount between asking and achieved prices across the UK is 3%.

House price inflation in the cities is running ahead of earnings, but the average price is still lower than in 2007.

The outlook for housing demand remains positive against the backdrop of lower mortgage rates and rising consumer confidence, but the current rate of growth may prove unsustainable.

Richard Donnell, director of the research, Hometrack, said: “There are signs that the pace of city level house price growth is likely to continue slowing.

“There has been a surge of demand since the election in May but weaker mortgage approvals and evidence from survey data suggests less frenetic demand in the final quarter of the year.”

Donnell said there is a wide variation in performance from city to city emphasising that there is no single UK housing market.

“House prices in Belfast prices still remain almost half the level seen in 2007 while those in London are 43% higher.”

This reflects the strength of underlying demand for housing and the health of the local economy, Donnell said.