Liquid error: wrong number of arguments (2 for 1) London bubble warning as UK prices cool | Marsh & Parsons Sales and Lettings Estate Agents London

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London bubble warning as UK prices cool

Sun 20 Jul 2014

A leading global investment bank has warned that London house prices face "outright falls" amid signs that wider UK house price growth is beginning to cool. Figures published on Friday by the Council of Mortgage Lending showed that growth in gross mortgage lending plunged in June, as lenders continued to adjust to the Mortgage Market Review. The 17% year-on-year increase in UK mortgage lending was less than half the 35% seen in May, as recent breakneck lending growth slows. And now Deutsche Bank has warned that prices in London are vulnerable to a drop in international demand. Prices could fall in future as global growth and a strengthening pound makes it more expensive for foreign buyers to purchase property in the capital. Deutsche Bank economist George Buckley said: "Survey and anecdotal evidence point to the steam being taken out of the London market." Several factors, including falling demand from foreign investors, especially in China and Russia, and the growing strength of the pound, could make UK property look less attractive to international investors, he said. Withdrawal of stimulus measures by central bankers could also reduce house price inflation. "There seem to be more downside than upside risks to London housing going forward," Buckley said. Although Deutsche Bank didn't predict a full-blown crash, it said it "would not be surprised to see outright falls in asking prices". But UK brokers remain bullish about the outlook for the housing market, with CML figures showing gross mortgage lending up 4% in June to 17.5 billion. Stephen Smith, director, Legal & General Mortgage Club and Housing, said: "The MMR has not had the impact on mortgage lending that some were anticipating. Both the wider industry and our own figures show that mortgage lending has held up since the April deadline. "Indeed, the first six months of this year saw the highest lending figures that we have ever had." Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: "With new checks and balances in place, there is still room for muted growth without the risk of careering out of control. "The combination of MMR and macro-prudential action means there is now a strong safety harness fastened firmly around lending activity." Peter Rollings, chief executive at London estate agency Marsh & Parsons, said the slowdown in London was a sign that the market was moving to "healthier trading conditions".And he said the wider UK market was still in a state of recovery.

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