Growth in house prices slows as buyers adopt 'cautious' approach
Wed 30 Jul 2014
House price growth stalled during June as potential buyers adopted a more cautious approach, figures showed today. The average cost of a home in England and Wales was unchanged during the month at 172,011, according to the Land Registry. The annual rate at which house prices are rising also slowed to 6.4 per cent during the month, down from 6.7 percent in May. The slowdown in growth comes as separate research showed a steep fall in confidence among potential buyers in the face of high house prices and future interest rate hikes. A balance of just 5 per cent of people thought it was a good time to buy a home at the end of the second quarter, down from 34 per cent in the previous three months, according to Halifax. The group said the fall in confidence was the largest recorded since it started collecting the data in 2011. Around 55 per cent of potential buyers said raising a deposit was the biggest barrier preventing them from getting on to the housing ladder, while 35 per cent sited high house prices and 18 per cent admitted they were worried about future interest rate rises. But while buyers are now cautious, there was an increase in confidence among potential sellers, with a balance of 25 per cent thinking it was a good time to put a property on the market the highest level ever recorded by the index. Both groups also remained optimistic about future property price growth, with a balance of 66 per cent predicting further price rises. The Land Registry data showed that London continued to enjoy the highest house price growth of 16.4 per cent year-on-year, but this was down from 17.8 per cent in May. Growth was also strong in the East and South East at 7.8 per cent and 7.9 per cent respectively. But on a monthly basis, house prices fell in seven regions, with Yorkshire and the Humber seeing the biggest drop of 1.3 per cent, while prices fell by 1 per cent in both the East Midlands and North East. Even in London, which has been the main driving force for the market, prices edged ahead by just 0.1 per cent during June. Evidence that the housing market is beginning to slow down naturally will help to further ease concerns that a property price bubble had been building up, particularly in London. Strong price growth had caught the attention of policymakers and led to the Bank of England introducing measures to help calm the market.But recent data has suggested some of the heat has started to come out of the market as more people put homes up for sale, helping to ease the supply shortage. At the same time, potential buyers have become more cautious in the face of high house prices and speculation about when interest rates will start to rise. Peter Rollings, chief executive of Marsh & Parsons, said:"After a frenetic start to the year, the pace of house price growth has slowed this quarter as the market stabilises and returns to more normal trading conditions. "With more choice coming onto the market, sellers are able to find their next onward purchase and consider trading up." Despite suggestions that the market is slowing, a total of 1,028 homes worth more than 1m changed hands during April, the latest month for which Land Registry transaction data is available, the equivalent of 34 a day. Recent strong house price growth has left the average UK home costing 260,311, according to Zoopla.