Home Property London’s housing market stagnates despite price increases

London’s housing market stagnates despite price increases

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10th Jul 12 1:44 pm

London’s housing market showed signs of slowing down in June despite being the only UK region to report rising prices, according to a survey.

The pace of price increases has slowed significantly since the start of 2012, according to RICS UK Housing Market Survey. The average number of sales per surveyor in June remained at 10.

An increase in agreed sales on May’s figures provided some encouragement for the property market, although interest from potential buyers dwindled in London. The number of new homes coming onto the market increased.

Sales expectations among chartered surveyors in the capital were good, with 11% more surveyors forecasting increases than falls.

Benson Beard, from Bective Leslie Marsh in Chelsea, called on the government to clarify their policies on capital gains tax (CGT) and ‘mansion’ taxes, or else money earmarked for the London property market could be spent elsewhere.

“The government need to sort out their proposals with regard to new ‘mansion’ taxes and CGT quickly,” said Beard. “[There is] already evidence of monies being invested elsewhere because of uncertainty and the prospect of punitive taxes.”

Buyers have also been frustrated in their attempts to get on the property ladder due to the difficulty of getting a mortgage.

Stephen Whitley, from R Whitley & Co. in West Drayton, said: “The lack of mortgage funding and strict lending criteria remains the principal reason for the housing market not performing as it should do.

“Would be purchasers are left with no alternative but to rent. The rental payment often being well in excess of what the mortgagerepayment would be.”

Nationwide, activity levels fell in June. New buyer enquiries and new instructions hit their lowest levels for more than a year and a half, the survey showed.

Some 22% more surveyors reported price drops rather than increases in June, compared to 17% in May – the weakest reading since October.

RICS housing spokesperson Peter Bolton King said: “The housing market didn’t manage to turn a corner last month and activity remained in the doldrums.

“Fewer vendors looked to test the market and levels of buyer interest seem to have fallen back since the expiry of the stamp duty deadline earlier in the year.

“Although there is some positivity that the amount of sales going through is going to see an increase, it is unlikely that we will see any real movement until purchasing a property is more affordable and accessible for the likes of first time buyers.”

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