UK house price growth dropped to its lowest level in December since May 2013 as buyers continue to show reluctance to engage with the market, with 36% more surveyors reporting property price falls in London compared with the previous month.
In a report, the Royal Institute of Chartered Surveyors (Rics) highlighted factors such as constrictions on banksí lending criteria enforced by the BoE in the middle parts of last year, and public uncertainty over the potential impact of a new government this year, as reasons for sustained waning demand.
Ricsí figures show that there were 45% more surveyors reporting a fall in buyer enquiries from November to December. The net figure of surveyors reporting price rises as opposed to falls across the UK is now +11% having steadily fallen since March.
Surveyors said that Scotland, Northern Ireland and the North of England were all showing signs of a pick-up in buyer demand, as rising real wages and general economic confidence increased the willingness of prospective house-buyers to engage in the market.
However, in London +36% of surveyors reported house prices falling rather than rising. So much heat has been taken out of the capitalís property market, that sellers are reluctant to market houses at what they believe to be sub-par prices. At the same time, buyers arenít seeking to engage with the market due to reasons including uncertainty in the face of an election, tighter lending criteria and general disillusionment with the London property market, further driving down prices.
Houses in London have increased by 90% in value since 2004, compared with UK average growth of 56%, with the lack of affordable supply and intense demand the key underlying reason for this.
Tightening measures on lending entailed within Aprilís Mortgage Market Review (MMR) sought to stifle the exponentially increasing property values of London, and these appear to have had a profound impact, with properties within the Capital falling for the fourth consecutive quarter.
Adding further weight to the dampening effects of the MMR, the number of nationwide buyer enquiries decreased in December for the 6th successive month. The selection of houses on the market to choose from has thinned out considerably over the past 10 months, with analysts considering the number of properties for sale to be approaching record lows.
However, Simon Rubinsohn, Rics chief economist, implied that with such a small amount of supply available on the market, any increase in buyer demand would help push up prices at an exceptionally fast rate.
Reforms to stamp duty, announced in George Osborneís Autumn Statement, are likely to stimulate buyer demand in the coming months due to the tax benefits on offer for anyone buying houses under £937,000. When the effects of stamp duty are considered alongside the record low mortgage rates on offer from all high street lenders, itís understandable why many housing experts are predicting the market to gather up momentum over the course of the year.
Mr Rubinsohn said: ìThe changes to stamp duty are expected to provide a timely boost to activity in the housing market across most of the country but there remain significant challenges, particularly for first-time buyers.
ìCritically, the stock of property on the market continues to hover close to historic lows with new instructions to agents falling in 10 of the last 12 months. Indeed, there is a risk that with so little housing available any pick-up in demand could rapidly feed through into higher prices rather higher sales.î
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