Property prices 'may have peaked'

Updated: 

PA

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

The people who affect house prices