London and South East slowing housing market

Here’s why…

Growth in the housing market is slowing down as London and the South East pull down the UK average, surveyors suggest.

Figures from the Royal Institution of Chartered Surveyors (Rics) July survey show that the headline price growth gauge slipped from +7 per cent to +1 per cent, signalling prices were broadly flat over the period and representing the softest reading since early 2013.

Central London remains negative with the pace of declining growth broadly matching that of the previous three months.

Rics said that chartered surveyors are starting to report early signs of this flatter trend spreading outside the capital, as the price balance for the South East of England fell into negative territory, posting the weakest reading for this part of the country since 2011.

However, Rics said that house prices remained ‘quite firmly on an upward trend’ in other areas, Northern Ireland, the West Midlands and the South West all posted increases in July.

Simon Rubinsohn, chief economist at Rics, said: “Sales activity in the housing market has been slipping in the recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come.

“One reason for this is the recent series of tax changes but this is only part of the story. Lack of new build in the wake of the financial crisis is a more fundamental factor weighing on the market. And there are some very real consequences for the economy from all of this including the impact on the ability of people to be mobile when looking for work.”

The July survey also found that, over the previous two months, there had been a particular gap between the original asking price and the listed selling price for homes, most noticeably in homes at the top end of the market.

Of those surveyed 68 per cent reported that homes marketed at more than £1m are seeing the greatest deviation from listed prices, and were being sold for less than their original asking price.

For homes listed between £500,000 and £1m 57 per cent of surveyors said they had been sold for less than the original asking price while 37 per cent said homes listed at less than £500,000 had been sold below their original asking price.