Average house prices growth in the UK has slowed to 3.5% but there are stark regional differences with falls in London and the South East and stronger growth in the Midlands and the North.

The latest housing market analysis from Carter Jonas reveals that Northampton experienced the highest rate of annual house price growth of 6.5% in the 12 months to May 2018 while there was a fall of 2.8% in Oxford and a fall of 6.7% in the prime central London market.

Overall, national house price growth is on an upward trajectory, but continues to slow with rates ranging between 1.5% and 3.5% for much of 2018 to date, compared to an annual average of between 7% and 9% in the four years prior to 2017.

The report says that while the UK average house price growth indicates a positive picture for the market, further analysis reveals an ongoing juxtaposition between house prices in the north and south. While there has been notable growth in the Midlands, the North, Scotland and Wales, this is buoying overall market trends but hiding the regional differences.

It explains that with fall in price central London and Oxford, there is a distinct tale of price moderation in some of the traditionally affluent regions. After almost a decade of consistent growth, a disparity has emerged between house prices and affordability and as wages fail to keep pace with house price rises, buyers inevitably move elsewhere in search of better value.

By contrast, values in the North West rose by 5.3%, by 3.6% in the North East, by 3.2% in Yorkshire and the Humber and by 3.1% in the West Midlands. As well as strong growth in Northampton, Leeds also saw a significant rise of 5.7%.

The polarity between values in the North and South of the UK is also reflected in sales volumes. Comparing average monthly sales volumes in the periods January 2014 to February 2016 and April 2016 to February 2018, Wales saw growth of 7.2%, there was a rise of 5.3% in the North West and a rise of 5.2% in Scotland.

It points out that a reduction in transaction volumes is commensurate with a slowdown in house price growth, it largely derives from the second home and investor market. Indeed, buy to let mortgages have declined on average by 35% since April 2016, and by 10% in the 12 months to March 2018 alone.

While there has been a 2% increase in first time buyer mortgages over the same period, the increase isn’t significant enough to counterbalance the recession of landlords from the market.

‘After a period of rapid house price growth in London and the South East, a slowdown was always inevitable, and arguably essential, to allow wages to catch-up and buyers to be able to finance their move,’ said Rory O’Neill, head of residential at Carter Jonas.

‘The correlation between areas of affordability and an uptick in transaction volumes is a trend we should expect, particularly given that buyers are increasingly price conscious and brilliantly savvy about how best to make their budget work for them,’ he explained.

‘Perhaps what is most shocking is the 35% decline in buy to let mortgages since the taxation levy was introduced in April 2016. The implication is that rental stock levels will fall into decline, placing greater pressure on a property market already constrained by lack of supply. For that reason alone, the Chancellor needs to consider whether stamp duty penalties are truly the right solution to resolving the housing crisis,’ he added.