Momentum behind London’s property boom appears to be fading, according to a survey today that added to signs that rapid house price growth in Britain is starting to moderate.
The Royal Institution of Chartered Surveyors’ monthly house price balance eased to 49 in July, its weakest reading since February. June was revised downwards slightly to 52.
Weakness centred on London, the survey showed. Sales and new buyer enquiries in the capital fell more sharply than elsewhere in the country, with a net balance of just 10 per cent of London respondents reporting rising prices - down from 30 percent in June.
Buyer enquiries in London fell at the fastest rate since April 2008.
“The shift in mood music among potential buyers in the London market has been particularly pronounced but that is in a sense consistent with the move to a more sustainable market in the capital,” said Simon Rubinsohn, RICS chief economist. “Significantly, members now expect price gains over the next year to be faster outside of the capital than in it.”
Last month official figures showed London house prices rose 20.1 per cent on the year in May - a record increase.
Bank of England governor Mark Carney has said the housing market represents the biggest domestic risk to Britain’s financial stability, so signs the market is pausing for breath will likely be welcomed by BoE officials.
British house prices stagnated in July after strong growth in June, cooled by tougher checks on mortgage lending, a separate survey from mortgage lender Nationwide showed in July.
Speaking yesterday after the BoE published new forecasts for the economy, Carney said the introduction of more stringent mortgage affordability tests in April likely helped to slow housing market activity - though this could prove short-lived.
But last week another lender - Halifax - said house prices rose at the fastest annual rate last month since the start of the financial crisis, contrasting with other recent surveys. Looking ahead, RICS said surveyors expect price momentum to remain “robust”, at least in the near-term. Its sales-to-stock measure of market slack rose to 41 in July, its highest level since 2007. But RICS added that there were signs surveyors were less bullish about price expectations over a five-year horizon.
Reuters
