Housing boom potentially peaks as prices of new houses on the market come to ëa virtual standstillí, says Rightmove
The recent burgeoning surge in property prices appears to have decelerated across the UK this month according to Rightmoveís newly published House Price Index (HPI). Adding further fuel to the fiery debate surrounding house prices, Rightmove suggest that prices have reached an ëaffordability capí across the country, especially in London.
In unprecedented fashion, the asking prices issued on the Rightmove website for houses in London have fallen by 0.5pc in June, compared with last month. Whilst this price fall is partly due to general buyer reluctance, it can also be attributed, to some extent, to sellers seeking to profit off record values, with a 23.2pc surge in the number of houses available on the London housing market. This increase in supply is mirrored across the country, but nowhere more drastically than within the capital.
In other regions of the country, the cost of new houses put on the market in June was practically unchanged from last month, increasing only by 0.1pc or £272, as claimed by Rightmoveís HPI. The significance of this plateau in house pricing is highlighted when compared with Rightmoveís May HPI rising by 3.6pc on the previous month.
Miles Shipside, director of Rightmove, claims that the data procured shows that after months of exponential rises, the London property market is beginning ëstarting to run out of steamí.
"The London market powers the rest of the UK but is starting to run out of steam, said Mr Shipside.
"While the legacy of rises in central London continues to ripple out to its better-value commuter belt, fuelling price increases in all southern regions, London itself is now marking time. It's an example to the rest of the country of what happens when affordability and common sense get stretched too far," he said.
"Some sellers will be looking to cash in and possibly get a lot more house for their money further out, but they may have missed the peak in the rush to realise their gains as parts of London appear to have hit the upper limit price buffer.
"This rise in the number of sellers has also been seen in the north and, when combined with this month's price falls in five out of six northern regions, should put paid to some of the ill-informed national bubble talk," he added.
The ramifications of the mortgage market review, an increase in the number of houses on the market and a waning in buyer demand are noted grounds for ëalleviating some of the upwards price pressureí.
This point was stressed by Mr Shipside who said: "It is certainly causing a major headache for some estate agents with U-turns by lenders meaning sales falling through and heartache for buyers and sellers who thought they had a deal agreed," Shipside said
Meanwhile, alternate research further backs up the Rightmove position. The Royal Institution of Chartered Surveyors (Rics) stated that the number of queries regarding the purchase of new homes had dropped to its ëslowest pace since February 2013í.
Data gathered by reputable surveyor, e.serv, displayed the sharpest drop in the number of house purchase loans taken out for 11 months.
Rightmoveís research will be received well by Mark Carney, governor of the bank of England, who recently forecasted that rising house prices, most pressingly in London, were ëthe biggest risk to financial stabilityí within the UK economy.