In fact, the number of buyer inquiries has plunged to its lowest level since the financial crisis of 2008, according to the Royal Institution of Chartered Surveyorsí (Rics) latest report, which said that ìLondon indicators are going into reverseî.
The number of house sales decreased to 16 per surveyor in July, from 19 in June, which represents another sign that potential house-buyers are shunning record high prices, and supply could be starting to outstrip demand. The report from Rics suggested the drop in potential house-buyers, coupled with the lowest total of inquiries since 2008, is indicative of house prices becoming more affordable over the coming months.
The projected fall in Londonís house prices could be in no small part due to the Bank of Englandís restrictive measures, imposed on lenders in April, to curtail the amount of risky loans borrowers took out to fund audacious house bids.
London has become the UKís hotbed of expensive property, with house prices escalating month on month for the past year, due to a lack of affordable supply, and a rocketing number of first-time buyers keen to take out fixed-rate mortgages at the current base rate, rather than be subjected to bulkier monthly repayments following the BoEís projected base rate hike.
However, Rics recent data has given potential house-buyers fresh hope that the cost of residing in the capital could steadily grow to be more reasonable. Simon Rubinsohn, chief economist at Rics, said: "A range of policy initiatives adopted by the Bank of England in recent months ñ alongside heightened expectations surrounding a turn in the interest rate cycle ñ has clearly had an impact on sentiment in the market. "The shift in the 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." He added.
Regional House Price Growth to outstrip London
Rics appeared confident within its report that property prices would climb more rapidly in the UKís outer regions, with figures for London of particular intrigue to any would-be house-buyer. In their report, Rics predicted a 4.7% drop in annual house price growth in London to 4.6% - which is now slower than its forecast for the rest of the UK.
This perspective is reinforced by findings from estate agents, Haart, earlier this week which reported a 32.3% increase in supply, in the capital, over the last year, alongside a 15.7% decrease in demand. Haart pointed to buyers being more wary over dauntingly hefty mortgage repayments, combined with sellersí longing to cash in on record high prices, leading to an effective moderation of house prices within the capital. Paul Smith, the business's chief executive, said: "The second half of 2014 marks a shift in favour of buyers as healthy volumes of stock return to the market. "Many homeowners are adopting a now or never attitude to take advantage of the continuing strength of the market having seen their equity rocket over the last year at a time when mortgage deals with decent loan-values are still available. Interest rates are to remain at historic lows until the start of 2015 at least and this is helping wider confidence," he said.
"We have seen in London a pretty marked shift in the supply and demand balance, moving away from a very hot spring selling period to more sober demand over the last few months, which is no bad thing," said Adam Challis, head of residential research at JLL. "Prices have got very toppy - it no longer feels the most sensible time to buy and we have reached a tipping point in the market," said Mr Challis. "But we still think that while central London rebalances itself, growth in the commuter belt, based on stronger fundamentals, will outperform the core."
Impact of Policymakers
Measures taken by policy-makers cannot be overlooked for their impact on the situation, with the governmentís Help to Buy scheme certainly contributing to the heavy number of buyer inquiries in the months since its implementation.
However, with the UK tentatively tiptoeing into pastures of economic growth, improved buyer confidence has shown signs of galvanising the market.
Moreover, regulatory measures set out in Aprilís Mortgage Market Review (MMR) to combat excessive borrowing could also have impacted on the number of buyer inquiries, according to Rics.
Yet it is apparent much more action must be taken. Wage growth has stagnated behind inflation for years, which has been conflicting with rising house prices in months gone by. The issue of falling real wages is at the forefront of the publicís mind, given the Office from National Statisticsí bleak findings earlier this week.
Also, the Bankís much talked about cap on loan-income ratios is set to be implemented in October, the effects of which could further stabilise the market. Peter Rolling, executive at Marsh & Parsons, said: ì"Currently, the key component stabilising the London market is an increasing supply of property, which has surged 52% since the beginning of the year.î However, the UK must address other factors in its pursuit for stability within the housing market for a significant period of time.