Buyer demand flatlines as slowdown kicks in
Thu 14 Aug 2014
Buyer demand "flatlines" as slowdown kicks in
Buyer demand has "flatlined" and sales growth moderated as the UK housing market pauses for breath after its
hectic start to the year.
The booming London market looks set for a particularly sharp slowdown.
Demand for new homes fell in July, the first monthly decline since since January 2013, while supply increased for
the second consecutive month, according to the July RICS Residential Market Survey.
As demand and supply rebalance, house price growth across the UK appears to be moderating.
A net balance of 49% more respondents reported an increase in prices in July, down from 52% in June and 56%
Sales and new buyer demand fell sharpest in London, with enquiries falling at their fastest rate since April 2008.
In the capital, a net balance of 10% more respondents reported an increase in prices, down from 30% in June.
The average number of sales per chartered surveyor, however, increased to 24.6, up from 21.1 at the start of the
year, and sales expectations remain positive across the country.
The RICS said prices are still projected to rise by 2.6% over the next 12 months, although that is down on the 4%
expected at the start of the year.
Simon Rubinsohn, RICS chief economist, 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 amongst potential buyers in the London market has been particularly pronounced."
"The market in general is showing a greater degree of resilience, but that largely reflects the fact that in some
areas the recovery has only recently taken hold and affordability is rather less stretched.
"Significantly, members now expect price gains over the next year to be faster outside of the capital, than in it."
Peter Rollings, chief executive of Marsh & Parsons, said: "The housing market hit the ground running at the start
of this year, but as we move into the second half of 2014, it has settled into a more sustainable rhythm."
"The process of buying and selling property in the capital is noticeably less fraught and off-putting than it was a
couple of months ago. This month, we recorded 12 registered buyers for every available property in the city - half
the level witnessed in January, but still representing a healthy level of demand." Andrew Boast, co-founder of Shareamortgage.com, from the lack of affordable property is holding potentialbuyers back. "People are being forced to sit tight in the hope that properties will become more affordable.
"With average weekly earnings only increasing by 0.3%, property prices have risen far faster than average
earnings and haven't given people the time to catch up, leaving them stuck either renting or unable to trade
"With a 10% deposit, a person earning the average wage of 26,000 would need a mortgage of six times their
salary to buy an average price property of 172,000.
"It also won't have helped buyers' confidence that there is so much speculation over the imminent increase in the
Bank of England base rate or the Financial Policy Committee intervention on lending."