Boom in UK housing market eases
The excess froth in the UK housing market, particularly in the capital, looks to be dissipating as the market returns to a more stable outlook.
New buyer inquiries fell for the second month in succession in August and the number of agreed sales declined for the first time since September 2012, according to the Royal Institute of Chartered Surveyors.
The statistic captures the experience of surveyors at the start of the buying process so is considered one of the best forward looking indicators of the market. Rics said the overall picture was of a return to a “less volatile market” with more stable price expectations.
A net balance of 9 per cent of those questioned are expecting prices to rise rather than fall during the next three months, down from a balance of 51 per cent at the start of the year.
The booming London market, where prices over the past year have increased at roughly double the rate seen in the rest of the country, also appears to be cooling, with another dip in new buyer interest in August.
Simon Rubinsohn, chief economist at Rics, said there were increasing signs that London was moving on to a more sustainable footing, with a modest increase in the number of instructions coming on the market helping to create a better balance with demand and “taking the edge off price gains”.
Elsewhere, the market was looking stronger, he said, adding this “largely reflects the fact that in some areas the recovery has only recently taken hold and affordability is rather less stretched. Significantly, members now expect price gains over the next year to be faster outside of the capital, than in it.”
While buyer inquiries in Scotland remained firm, surveyors report anecdotal evidence that the market activity is slowing with sellers adopting a wait-and-see approach to the outcome of the referendum vote.
Mr Rubinsohn said concerns over a likely rise in interest rates in the not too distant future has helped take “some of the momentum” out of the market, but members are also reporting that the impact of implementing the tighter affordability checks required by the mortgage market review regulations are taking a toll on activity and slowing the transaction process by about a month on average.
Earlier this week data from the Halifax showed the rise in UK house prices slowed in August, with prices in the three months to August 9.7 per cent higher than in the same period a year ago, lower than the 10.2 per cent increase recorded in July.
Mortgage approvals also fell back in July, after having risen in June, according to Bank of England data.
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