While the property market in London remained sluggish in May, Edinburgh and Manchester led the price growth across the U.K., according to a report Friday.
London’s home prices edged up 0.4% year-over-year last month to an average of £491,200 (US$648,115), marking the slowest growth rate in nine years, according to Hometrack, a market information provider.
Within London, 43% of local areas saw home prices falling. The Financial District was the worst-performing market, with prices declining 3.2% over the past 12 months.
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Conversely, Edinburgh in Scotland (7.1%) and Manchester in Northern England (7.0%) had the fastest pace in price appreciation among the 20 cities HomeTrack covers.
The 20-city composite price index rose 4.6%, equating an average price of £257,200 (US$339,363).
As house prices in regional cities continue to outpace London, the differences between home prices are narrowing.
The average home prices in Edinburgh and Manchester are currently at £225,300 (US$297,117) and £163,300 (US$215,354).
In Cambridge (-0.9%) and Oxford (1.2%), average homes prices stood at £433,800 (US$572,379) and £427,300 (US$563,802), respectively.
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The pricing convergence reflects broader economic and income growth in each city, as well as housing supply and the net flow of investment into the housing market, said Richard Donnell, insight director at Hometrack.
The trend will likely continue in the next couple of years, according to the firm. Home prices in Manchester, Edinburgh, and other regional cities will keep rising, while price growth in London will remain flat, with a projected annual rate of 1-2%, according to Mr. Donnell.
"As a result, the gap between house prices in cities outside of the South East and house prices in London will continue to contract," he said.