On the frontline: Does a slowing rate of growth mean lower house prices?

Ed Mead, executive director of Douglas & Gordon
One quarter is a long time in the property market. Our Investor View reports show Q1 growth across 18 offices at 6.5 per cent, Q2 2.1 per cent and Q3 0.1 per cent. So does a slowing rate of growth mean house prices will fall? Messrs Osborne and Cameron will be hoping not, and Douglas & Gordon doesn’t think they will either.
In a uniquely aspirational market, the top end is relevant. The LibDems, who started the whole mansion tax debacle, have also started the legislation’s journey into the long grass, so it is conceivable we’ll see a bit of relief before the election. However rose-tinted that might appear, the difference between now and six months ago is palpable, with buyers now seeking security before closing a deal, even when they’re seeing average asking prices down by over five per cent. This is also against the backdrop of the cheapest mortgage rates ever. Surely, anyone worried about interest rate rises can hedge with a five year fix at well under three per cent?
Sellers are still convinced they have the advantage over buyers in the market at the moment. While Prime Central London buyers may have the luxury of a discretionary sale, most in emerging prime move because they have to, so may live to rue a delay. Calling the market is always fraught with risk and is nervy enough with liquid investments let alone your home, but given most people buy and sell in the same market, does it really matter when you make your move? A flat or faltering market is always the best time to upgrade as despite a small putative loss on what you sell there may be substantial savings that will more than ameliorate this on any larger purchase.
Oddly the English political question posed since the Scottish referendum will make south east Labour MPs more conciliatory to avoid cutting Scotland off, and with it their future electoral hopes. So I think swingeing taxes on rich Londoners are less likely than they were.