London property prices: Slowing demand in the capital drives national market dip but it's “temporary”

 
Lynsey Barber
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Weaker activity levels are beginning to slow the pace of house price growth (Source: Getty)

A fall in demand for houses from new buyers in London is leading a dip in the national housing market as house price growth remains sluggish.

Demand fell for the fourth consecutive month in October, according to the Royal Institute of Chartered Surveyors (Rics) but the number of houses coming on to the market remained broadly the same.

Stricter mortgage lending rules have made potential buyers a little more cautious, said Rics chief economist Simon Rubinsohn, as had the upcoming general election.

"The flatter trend in the market is partly a reflection of potential buyers becoming a little more cautious about making a purchase as more stringent lending criteria has made it harder to access mortgage finance," Rics said.

"An increasing awareness of the approaching general election also appears to be contributing to the softer market if the responses to the latest survey are anything to go by. However, with new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices."

Despite the slowdown, surveyors expect the trend to be temporary, with medium term outlooks remaining positive

A rise in interest rates which had also played on buyers' minds and could now help spur growth after the Bank of England ruled out a rise until autumn 2015.

Weaker activity levels are beginning to slow the pace of house price growth. All regions in England and Wales still recorded price growth, however, “with the exception of London, where the supply and demand dynamic that had proved such a boost during 2013 has largely gone into reverse,” said the report.

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