Bubble averted? Housing market shows signs of cooling
Published by Max Salsbury for 24dash.com in Housing and also in Finance
For sale sign
The UK's housing market has begun to show signs of cooling, with new seller asking prices rising by just 0.1% this month.
And, according to Rightmove's figures, more regions have recorded price falls over rises, with a 0.5% drop in London apparently caused by a combination of buyer reluctance and a surge of over 20% more sellers rushing to market this month.
The news that the market seems to be cooling will please the Bank of England. Governor Mark Carney warned last month that the housing market's spiralling prices represented the greatest threat to the UK's economic recovery.
The near-stagnation follows substantial increases in the price of property coming to market over the first five months of 2014.
While demand usually cools over the summer months, the marginal increase of 0.1% (+272) is below June’s 0.6% average over the last 10 years.
With the exception of London, all the regions that recorded falls are in the north.
Though all regions have seen an increase in supply as more people decide to try to sell, the capital has seen a rush of new sellers.
With the ebb in demand and the flow of extra property choice for buyers coinciding with the implementation of the new mortgage market review and its tighter lending criteria, the net result is that some of the momentum has been taken out of the market, Rightmove says.
Miles Shipside, Rightmove director and housing market analyst, said: “The London market powers the rest of the UK but is starting to run out of steam. 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. Through luck or judgement it appears that the timing of the Mortgage Market Review, more property for sale in all regions, and a tail-off in pent-up buyer demand are alleviating some of the upwards price pressure.
"This will come as a relief to the Governor of the Bank of England and the Financial Policy Committee, who have cited an over-heating housing market as a serious threat to economic recovery and have further powers to use should it get out of hand.”
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