The annual rate of house growth in key cities in the UK has started to slow after 12 successive months of rising prices, according to the latest index figures to be published.

But there is some regional variation and house prices in large regional cities outside southern England continue to grow while those in London have seen a market slowdown, the Hometrack cities index shows.

Outside the south house price growth continues to hold steady at 7% to 8% per annum with no sign of an imminent slowdown. Aberdeen is also registering a slower rate of price falls compared to recent months with a decline of 8% compared to 10% the previous month.

Overall city house prices increased by 9.5% year on year in July, down from 9.9% in June with Bristol in the south west seeing the strongest growth at 14% followed by London at 11.7%. While quarter on quarter the highest growth was in lower value, higher yielding cities where prices are rising off a lower base such as Glasgow, up 5.2%, Liverpool up 4.4% and Manchester and Nottingham both up 3.4%.

Even although it has the second largest annual price growth, London has registered a marked slowdown in house price growth over the last three months. Average growth in the last quarter was 2.1%, the lowest rate for 17 months.

The index report suggests this is due to weaker investor demand, affordability pressures and Brexit uncertainty impact demand at the same time as supply has risen. It points out that prices are still well up year on year but the signs are growth will slow further over the coming months.

Cambridge saw prices fall by 1% over the last quarter and the report says that prices in the city are more sensitive to weaker demand although the annual rate of growth is still running at 7.1%.

The report says that in the absence of adverse economic trends impacting employment and mortgage rates, the near term outlook is for a continued slowdown in London and stable growth rates in regional cities as households’ price record low mortgage rates into city house price where affordability remains attractive.

‘We continue to believe that turnover will register the brunt of the slowdown in London. In the face of lower sales volumes agents will look to re-price stock in line with what buyers are prepared, and can afford, to pay,’ the report explains.

‘Past experience shows that this process can run for as long as six months and relies, in part, in how quickly sellers are willing to adjust to what buyers are prepared to pay,’ it concludes.