London house price boom set to cool down

 
Tim Wallace
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LONDON’S housing market is likely to slow down over the summer and return to normal levels of growth in the coming years, Britain’s biggest building society said today.

Prices in the capital have shot up by as much as 20 per cent in the last year, but are likely to gradually slow down to increase by around five per cent per year in future.

“There will need to be a natural correction in London, this sort of price inflation is unsustainable,” finance director Mark Rennison told City A.M.

“The anecdotal signs are that the rate of growth is slowing, and we will watch this over the summer months.”

Nationwide has been a key participant in mortgage growth across the country – its annual results, out yesterday, show gross mortgage lending of £28.1bn in the year to April, up 31 per cent on the year.

In particular it focused on first time buyers, giving out 58,100 such loans and giving the Nationwide a 20.2 per cent share of the market.

The building society signed up an additional 430,000 currency account holders, an increase of 18 per cent on the year, in part helped by the seven-day switching scheme.

And it made a statutory profit of £677m in the year, up four-fold on the year.

The lender increased its core tier one capital ratio to 14.5 per cent and its leverage ratio to 3.3 per cent, well ahead of regulatory requirements.