Housing market growth at 18 month low
UK house prices rose 0.1% in July, the slowest level of growth since February 2013. Tougher rules in the mortgage market and a reluctance from buyers to pay what they believe is over the odds for property were the main reasons for the slowdown.
The firm said house prices were now stalling in London with only 12% of London postcodes registering price gains in July. In addition 11% of London markets have witnessed a price fall this month.
Across the UK some 24% of postcodes saw a price increase versus 1.5% which saw a decline. In the spring around half of all areas were seeing a price increase each month.
There has been a 0.9% fall in the number of new buyers registering with estate agents while the number of sales agreed this month has fallen by 0.3%.
Richard Donnell, director of research at Hometrack, said: “Seasonal factors always lead to a slowdown in demand and market activity in the summer months, but it is clear that there are bigger forces at work with a pronounced loss of momentum in the London housing market in the last three months.
“The housing market has tended to move in ‘mini cycles’ over the last few years, each spanning 18-24 months, largely on the back of changing buyer sentiment.
“Overall, market conditions have been strong since early 2013, as a result of pent-up demand returning to the market outside London and with buyers encouraged by low mortgage rates and the launch of Help to Buy, but it now appears that market sentiment is starting to change.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “After the rapid pace of house price inflation in parts of the country over the first six months of this year we are starting to see the pace of growth slow. It is important over the coming few months that the government focusses on building a housing market that has sustainable growth.
“There has been much talk of a bubble developing in London, however other parts of the country have seen much lower levels of growth so any move to curb London prices could kill off these markets. The government needs to walk the line between encouraging growth in the regions and stopping London from growing excessively.”