House prices in Britain stalled as the number of new buyers plummeted in July and consumer sentiment shifted from over-zealous to cautious. The rate of house price growth has almost ground to a halt, falling to its slowest rate in 18 months – according to a leading survey of estate agents.
New data from Hometrack showed that property values edged up by 0.1pc in July, a further decline in the pace of growth from 0.3pc last month, and from 0.7pc in February – the year’s high. While the summer holiday season always results in a slowdown, house price growth is slower than it was this time last year, as tougher lending rules and dampening demand have put the brakes on the market.
The year-on-year rate of growth has also slowed from 6.0pc in the 12 months to June, to 5.8pc in the year to July. The fall in the number of prospective buyers registering interest with estate agents has plummeted from 17.1pc in February to 0.9pc in July – a much more marked drop than in the previous year.
“Seasonal factors always lead to a slowdown in the rate of growth for the last two months, in part due to warnings from the Bank of England and others of a possible house price bubble,” said Richard Donnell, director of research at Hometrack.
“There’s a a growing element of caution from buyers about the market outlook as the prospect of future interest rate rises looms, and the new tougher mortgage market checks implemented as part of the Mortgage Market Review (MMR) impact on demand.”
Less than a quarter of UK postcode districts recorded a price rise in July, almost half the level seen in the spring, when half of markets were logging an increase in the value of a property. But the sharpest decline can be seen in Greater London.
The change in the number of new buyers registering with estate agents fell 3.4pc and the average time to sell slowed from 2.7 weeks in March, when property was flying off the London market, to 4.3 weeks in July. The Capital also saw the biggest drop (3.8pc) in the number of sales completed.
“This is not a short term blip,” said Grainne Gilmore, head of residential research for Knight Frank. “This latest survey shows us the direction of travel for London and the south-east.” This data follows news this week from Rightmove that asking prices in the UK had dropped marginally, 0.8pc, from June to July.
The Hometrack Housing Survey polls estate agents from across the UK.