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UK house prices up but Bank of England 'rhetoric having a drag on activity'

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UK house prices up but Bank of England 'rhetoric having a drag on activity'

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Published by Max Salsbury for 24dash.com in Housing and also in Finance

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UK house prices rose in June but the Mortgage Market Review (MMR) and Bank of England "rhetoric" are having a "drag on activity", according to RICS.

A net balance of 53% of respondents reported an increase in prices in June (from 56% in May) and prices rose in each of the twelve areas represented, RICS Residential Market Survey has shown.

The South East and Northern Ireland experienced the greatest price gains for the second consecutive month, while the rate of price growth in the London market appeared to be ease somewhat.

In the month that saw the Bank of England introduce a 15% cap on high (4.5 times and above) mortgages, respondents also perceived banks to be lending less, with average loan to value (LTV) ratios among first time buyers dropping for the second consecutive month to 85.1% (from 85.3% in April).

Looking ahead, as a result of the change in demand and increased supply, the number of respondents expecting prices to rise, rather than fall, over the next three months, dropped to 26% (from 46% in May).

Simon Rubinsohn, RICS chief economist, said: “The Bank of England’s recent introduction of a ceiling on high loan to income lending and a 3% interest rate stress test is unlikely on its own to have an immediate influence on the market.

"However, rhetoric from key officials at the Bank, including Mark Carney, alongside the consequences of the introduction of the MMR are already slowing momentum particularly in London.

"Buyer enquiries in the capital are now slipping back which suggests that the very sharp upward move in prices will flatten over the coming months. Elsewhere around the country we believe the more hard fought recovery should remain intact."

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