PROPERTY MARKET UPDATELast month, Nationwide, which produces a highly respected housing market index, said that prices are rising at their slowest pace since June 2013, dragged down by falling values in the capital. London is the weakest performing region and the only one to see a fall i.e. down 1.9% in the year and in four successive quarters.
The Royal Institution of Chartered Surveyors (RICS) reported subdued levels of new buyer enquiries and the supply of new properties increasing only marginally constrained by slow wage growth and tougher borrowing rules.
UK Finance, which represents most High Street lenders, reported at the same time that the number of mortgage approvals for house purchase was down 4.3% compared with 12 months earlier, at a time of year when we might have expected them to be racing ahead.
The housing market has actually been actually slowing for the past two years, according to the Office of National Statistics (ONS) i.e. since the EU referendum, particularly in London and the South East as prices have reached a peak of what many buyers can afford.
Yet average prices in London at £469,000 are more than twice the national figure of £215,000, and more than 50% higher than their 2007 peak and only 15% above those in the rest of the UK when the financial crisis struck.
Nevertheless, house prices are still high compared to incomes despite recent modest recent improvements in the relationship.
Before the referendum, prices were rising by 8.2% per annum which is less than half present levels with London down last month for the first time since 2012!
Activity has been compromised by political, economic and interest rate uncertainty as well as tax and regulatory changes on buy to let landlords.
In our part of North London, we are seeing some first time buyers taking advantage of the abolition of stamp duty for purchases up to £500,000 last November.
As a result, many prospective buyers are sitting on their hands and nervous to take on debt. Therefore, sellers need to be realistic about their prices to avoid a stand off with buyers.
The market continues to be supported by low interest rates, overall supply shortages and low unemployment although we have found recently that listings and viewings are on the rise. This will translate into more sales if buyers and sellers recognise the market is now at a different level than it was even a few short months ago.
New sales instructions and viewings are up at both of our branches over the past two months in the traditionally busy spring period for the property market - despite World Cup fever!
Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market.