Liquid error: wrong number of arguments (2 for 1) Heat could be leaving the Houseing Market as Inquiries & Sales plummet in the Capital | Marsh & Parsons Sales and Lettings Estate Agents London

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Heat could be leaving the Houseing Market as Inquiries & Sales plummet in the Capital

Wed 13 Aug 2014

Heat could be leaving the Housing Market as Inquiries & Sales plummet in the Capital

In fact, the number of buyer inquiries has plunged to its lowest level since the financial crisis of 2008, according
to the Royal Institution of Chartered Surveyors (Rics) latest report, which said that London indicators are going
into reverse.
The number of house sales decreased to 16 per surveyor in July, from 19 in June, which represents another sign
that potential house-buyers are shunning record high prices, and supply could be starting to outstrip demand. The
report from Rics suggested the drop in potential house-buyers, coupled with the lowest total of inquiries since
2008, is indicative of house prices becoming more affordable over the coming months.
The projected fall in Londons house prices could be in no small part due to the Bank of Englands restrictive
measures, imposed on lenders in April, to curtail the amount of risky loans borrowers took out to fund audacious
house bids.

London has become the UKs hotbed of expensive property, with house prices escalating month on month for the
past year, due to a lack of affordable supply, and a rocketing number of first-time buyers keen to take out
fixed-rate mortgages at the current base rate, rather than be subjected to bulkier monthly repayments following
the BoEs projected base rate hike.

However, Rics recent data has given potential house-buyers fresh hope that the cost of residing in the capital
could steadily grow to be more reasonable. Simon Rubinsohn, chief economist at Rics, said: "A range of policy
initiatives adopted by the Bank of England in recent months alongside heightened expectations surrounding a
turn in the interest rate cycle has clearly had an impact on sentiment in the market. "The shift in the mood
music among potential buyers in the London market has been particularly pronounced but that is in a sense
consistent with the move to a more sustainable market in the capital." He added.

Regional House Price Growth to outstrip London

Rics appeared confident within its report that property prices would climb more rapidly in the UKs outer regions,
with figures for London of particular intrigue to any would-be house-buyer. In their report, Rics predicted a 4.7%
drop in annual house price growth in London to 4.6% - which is now slower than its forecast for the rest of the UK.
This perspective is reinforced by findings from estate agents, Haart, earlier this week which reported a 32.3%
increase in supply, in the capital, over the last year, alongside a 15.7% decrease in demand.

Haart pointed to buyers being more wary over dauntingly hefty mortgage repayments, combined with sellers longing to cash in on
record high prices, leading to an effective moderation of house prices within the capital.
Paul Smith, the business's chief executive, said: "The second half of 2014 marks a shift in favour of buyers as healthy volumes of
stock return to the market. "Many homeowners are adopting a now or never attitude to take advantage of the
continuing strength of the market having seen their equity rocket over the last year at a time when mortgage
deals with decent loan-to-values are still available. Interest rates are to remain at historic lows until the start of
2015 at least and this is helping wider confidence," he said.

"We have seen in London a pretty marked shift in the supply and demand balance, moving away from a very hot
spring selling period to more sober demand over the last few months, which is no bad thing," said Adam Challis,
head of residential research at JLL. "Prices have got very toppy - it no longer feels the most sensible time to buy
and we have reached a tipping point in the market," said Mr Challis. "But we still think that while central London
rebalances itself, growth in the commuter belt, based on stronger fundamentals, will outperform the core."

Measures taken by policy-makers cannot be overlooked for their impact on the situation, with the governments
Help to Buy scheme certainly contributing to the heavy number of buyer inquiries in the months since its
implementation.
However, with the UK tentatively tiptoeing into pastures of economic growth, improved buyer confidence has
shown signs of galvanising the market.

Moreover, regulatory measures set out in Aprils Mortgage Market Review (MMR) to combat excessive borrowing
could also have impacted on the number of buyer inquiries, according to Rics.
Yet it is apparent much more action must be taken. Wage growth has stagnated behind inflation for years, which
has been conflicting with rising house prices in months gone by. The issue of falling real wages is at the forefront
of the publics mind, given the Office from National Statistics bleak findings earlier this week.

Also, the Banks much talked about cap on loan-to-income ratios is set to be implemented in October, the effects
of which could further stabilise the market. Peter Rolling, executive at Marsh & Parsons, said: "Currently, the key
component stabilising the London market is an increasing supply of property, which has surged 52% since the
beginning of the year. However, the UK must address other factors in its pursuit for stability within the housing
market for a significant period of time.

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