The pace of house price growth has slowed to the weakest in 18 months – and the London market is cooling “rapidly” and “dramatically”.
Reporting this morning, Hometrack said that weakening demand and a slowing in property price inflation are “more than just a seasonal slowdown”.
It said that tougher lending rules and changing buyer sentiment have both had an impact on demand.
In London, Hometrack says that 11% of areas are now registering price falls, while only 12% of London postcodes registered price gains in July.
Reporting for July, Hometrack says that house prices nationally crept up just 0.1% – compared with 0.3% in June and 0.5% in May.
The number of new applicants fell by 0.9% and sales agreed dipped very slightly by 0.3%.
The proportion of the asking price being achieved is also starting to decline nationally, as agents “find it hard to push prices ahead in the face of weaker demand”.
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 lead indicators in the survey have pointed to a slowdown in the rate of growth for the last two months, in part due to warnings from the Bank of England and others of a possible house price bubble.
“Demand for mortgages has also been slowing for several months now. There’s a growing element of caution from buyers about the market outlook as the prospect of future interest rate rises looms, and the new tougher mortgage market checks implemented as part of the Mortgage Market Review (MMR) impact on demand.
“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 Help to Buy, but it now appears that market sentiment is starting to change.”
He went on: “This is the first time in four years that London, which has long been the engine of the housing market, has a smaller proportion of markets registering price gains than in the regions.
“House price growth across the rest of the country, where price rises have been far less pronounced in recent years, could well be sustained into the autumn.
“While seasonal factors have impacted the level of price growth in the regions outside London, there is a slowing in the rate of growth but no evidence of any price falls.”
I do wish market commentary would be less inflammatory. The fact remains the front four months saw alarming price rises in London and the market has settled. We've arranged more sales post MMR as volume of instructions improved and potential sellers were less daunted by tales of coach loads of buyers at open days and sealed bids when buying onwards. To suggest 0.9 fewer buyers and 0.3% fewer sales in July is a "rapid" and "dramatically" slowed market bucking the usual seasonal trend is utter b*****ks from Hometrack.
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Over 900 reads and only one dissenting voice.
So how is anyone to know if Hometrack is wrong?
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Obviously too busy, despite the dramatic slow down 😉
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Hometrack, yep I think I remember that survey which came in and gots treated with the highest of attention (not)…… I would love to know from the agents who supply the data "Who in their business supplies the data?" and "do they keep a record of each previous survey?" If previous surveys are not kept and looked upon how can they be sure they are counting actual numbers and recording accurate information and not simply guessing.
We stopped supplying it, as it always landed on a desk of someone not actually "working out the data" just thinking erm it was busier last month so +5% for that one or yep less applicants last month so -3% there so on and so forth….. Not good on our part I know which is why we stopped doing the surveys, but I bet you companies who do it, are were just like us and have a staff member potentially guesstimating the answers and sometimes people who simply do not care or realise the important of reporting it accurately…. to guess and be even as little as 0.1% out, makes a mockery of the Hometrack findings…. another agent close to me admitted the same and said, he just gave it to a admin person and said just say everything was the same…..!
So have 100 people complete the survey and just 1 set of guessed answers means its wrong! I bet 50% of surveys completed are by someone guessing the % answers and not actually calculating them.
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So true, Ric. I would suggest the same be the case for the likes of the RICS and NAEA reports also, with at least SOME who complete them…
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Don't forget, 94.73% of statistics are made up on the spot… ;o)
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