House price growth in England and Wales down to 0.1% in July
House prices in England and Wales increased by 0.1% in July, a further decline in the rate of growth from 0.3% last month, and the lowest level of growth over a month since February 2013, the latest index shows.
Seasonal factors and an increasingly pronounced slowdown in the London market where prices have stalled in July, have been taking hold, according to Hometrack’s July Housing Survey.
It also reveals the slowest growth in house prices in 18 months and says that weakening demand and a continued slowing in the rate of house price growth is more than just a seasonal slowdown.
Indeed, tougher lending rules and changing buyer sentiment have impacted demand. London, which has been the engine for house price growth, has seen a particularly pronounced slowdown in the last month with a small proportion of markets in the capital now registering price falls.
Also, demand for housing fell slightly in July, with the percentage change in new buyers registering with agents at -0.9% compared to 0% in June. The gap between overall supply and demand has narrowed sharply in the last three months, pointing to a reduction in the upward pressure on house prices, meaning that the measure of demand has moved into negative territory.
Less than a quarter of postcode districts registered a price rise in July, almost half the level seen in the spring, when 50% of markets were registering price gains.
The proportion of the asking price being achieved is starting to decline nationally, as agents find it harder to push prices ahead in the face of weaker demand. The measure is still relatively high but has fallen from 96.8% in May to 96.1%. In London it has declined more sharply from over 99% to 97.5% over the same period.
The time on the market remains flat at an average of six weeks nationally, but there has been a slight rise in London from a recent low of 2.7 in March 2014 to 4.3 weeks. It’s also starting to rise in the South East, but elsewhere the downward trend continues.
The momentum of price rises in the London market has slowed dramatically in the last few months. Just 12% of London postcodes registered price gains in July. 11% of London markets actually recorded lower prices over the month.
‘Seasonal factors always lead to a slowdown in demand and market activity in the summer months, but it is clear that there are bigger forces at work with a pronounced loss of momentum in the London housing market in the last three months,’ said Richard Donnell, director of research at Hometrack.
‘The lead indicators in the survey have pointed to a slowdown in the rate of growth for the last two months, in part due to warnings from the Bank of England and others of a possible house price bubble. Demand for mortgages has also been slowing for several months now,’ he explained.
He also said there…