Property prices 'may have peaked'


%VIRTUAL-SkimlinksPromo%House sellers' asking prices have come "off the boil" amid signs that property values in some parts of London have hit the ceiling of what buyers can afford to pay, a property website has reported.

Rightmove said that asking prices across England and Wales were at a "virtual standstill" in June, edging up by just 0.1% or £272 on the previous month to reach £272,275 on average, compared with a stronger 3.6% monthly jump seen in May.
More regions saw prices fall than rise month-on-month, and London, which has been considered the engine of price growth, recorded a 0.5% monthly decrease in asking prices.

But prices in London are still up by 14.5% compared with June 2013 and now stand at around £589,776.
The North West saw the sharpest month-on-month fall in asking prices, with a 1.8% slide taking average values to £169,253.

In Wales, prices rose by 0.6% on a monthly basis and by 4.2% year-on-year, pushing typical values there to £178,520.

Rightmove put the monthly fall in values in London down to a combination of growing buyer caution and a huge 23% month-on-month jump in new properties coming up for sale, which has significantly widened their choice.

Miles Shipside, director of Rightmove, said of the London market: "Some sellers will be looking to cash in and possibly get a lot more house for their money further out, but they may have missed the peak in the rush to realise their gains as parts of London appear to have hit the upper limit price buffer."

Mr Shipside said that while there has generally been a jump in property supply across the country, estate agents' stock levels are still "well below" those seen last year - with shortages of properties on the market in popular locations still putting an upward pressure on prices.

The findings come amid speculation that further steps could be taken to cool the housing market.
Chancellor George Osborne announced plans last week to hand the Bank of England powerful new tools which would enable it to cap the size of mortgage loans as a share of the borrower's income or the value of the house.

Mr Osborne emphasised that the market does not pose an immediate threat to financial stability now, but he also said it is important to take action to ensure against any repeat of a period of boom and bust.

Meanwhile, the Bank has dropped hints that interest rates could rise sooner than expected, which would add to the costs of mortgage holders - although any increase is expected to be gradual.

Rightmove said that stricter mortgage lending rules which came into force in April have already dampened housing market demand. The rules mean that lenders have to question mortgage applicants in more detail about their spending habits, to make sure their home loan would be affordable, both now and when interest rates start to rise.

The website said some estate agents are reporting that some lenders are applying the new Mortgage Market Review (MMR) rules in a "knee jerk" way, and turning down mortgages which had been previously agreed in principle, leading to house sales falling through. It said it is hard to tell whether these initial reactions to the rules will lead to a longer-term downturn in buyer demand.

Rightmove's findings also echo those of the Royal Institution of Chartered Surveyors (Rics), which said that the recent sharp rises in some house prices and stricter mortgage lending rules are starting to take some of the strongest heat out of the property market as consumers become more cautious.

The people who affect house prices
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Property prices 'may have peaked'

They have the power to push a price higher, depending on how many other people are in the running for a home and how liberal they want to be with the truth to the buyers. In some cases, they can also do more harm than good by initially overvaluing a property. The worst case scenario is the home eventually sells for less than it would have done had it been priced realistically in the first place.

Sometimes a quick-moving solicitor can be the difference between getting the home at the price you want and getting into a bidding war or missing out entirely. If the buyer needs a quick sale, they're more likely to do a deal with someone who has a flexible solicitor who can push through the sale so it suits them.

Research by Halifax concluded that anti-social neighbours could take £31,000 off the price of an average home. If you’re selling, you should declare any problems you’ve had on a Seller’s Property Information Form, otherwise you could face a claim later on.

While an increase in Council Tax might not be too much of a deterrent to a potential buyer, plans to grant permission for new homes, a mobile phone mast or wind turbines could knock an asking price down. If you're a buyer, the local council should have details of any future planning applications and you can search them for a small fee.

A lot of traffic in an area obviously has an effect on air quality. Since 1997 each local authority in the UK has carried out studies of the air quality in its area. If an area falls below a national benchmark for air quality, it has to be declared an Air Quality Management Area (AQMA). Some residents of the Llandaff area of Cardiff expressed concern that it had become an AQMA due to an increase in traffic in the area. Whether this becomes a widespread issue remains to be seen.

Mortgage availability is a key driver of property prices. If no-one can take out a mortgage, then prices will stall and eventually fall. We've seen this happen in parts of the UK in recent years, as lenders tightened up their criteria following the credit crunch. Conversely, good mortgage availability will mean more people are competing for properties - to a seller's advantage if their home is desirable.

An outstanding local school can add around 8% to the value of a home, according to the Royal Institution of Chartered Surveyors. On the flipside, a not so good Ofsted report can take off a similar amount. If you’re concerned about a school’s performance, one way to get involved is to become a governor.

Initiatives such as the Help To Buy scheme have been credited with pushing house prices up. A buoyant economy with strong employment gives people the confidence to buy and leads to an upward shift in house prices, while rises in unemployment have the reverse effect. Planning restrictions, at both a national and local government level, affect the number of homes in a particular area.


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