The news from Nationwide Building Society that annual property price growth in London slowed from 25.8% in Q2 2014 to 21% in Q3 2014, with the average price of a home in the capital hitting £401,072, was released at the same time the mortgage lender revealed the average price of a UK residential property fell by 0.2% in September.
This small adjustment in property values in London and beyond could be good news, according to West Hampstead estate agent Paramount Properties, because it could help alleviate fears that the property market is in bubble territory.
As Nationwide Chief Economist Robert Gardner says: “Price growth may soften further in the final quarter of the year, given the high base for comparison from Q4 2013. However, the outlook remains uncertain. There have been tentative signs from surveyors and estate agents that buyer demand may be starting to moderate, but the low level of interest rates and strong labour market suggest that underlying demand is likely to remain robust.”
The surveyors Robert Gardner refers to is the Royal Institution of Chartered Surveyors housing market survey, which reports a majority of areas in the capital are seeing property price falls for the first time in nearly four years following a dramatic slide in the number of new house hunters.
A net balance of 8% of London surveyors reported values falling rather than rising in September. This is the first time the balance has been negative in London since the start of 2011, according to the RICS, which added that this spells the end of the longest sustained period of price growth in the capital ever recorded by the institution’s housing market survey.
If further evidence that we are not in a house price bubble is needed, take a look at a report from the Centre for Economics and Business Research, which predicts house prices will dip by 0.8% next year and 2015 will be a turning point for runaway property prices.
And the latest Hometrack National Housing Survey also indicates that the UK house market is slowing. The findings from the Hometrack survey of estate agents revealed that there was no change in the average UK house price in September following 18 months of consecutive increases. However, London was the only area to record a decline in property values in September, with further modest price declines anticipated in the run-up to Christmas.
What does this mean for the London property market over the next 12 months? With the economy in good health and consumer price inflation under control, the omens appear promising.
Quite simply, if you price your house sensibly, you will achieve a sale. The market is stable and although there has been a slight cooling through the summer months, it remains strong.