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Homebuyers’ resistance to soaring prices cools property market

by: Samantha Partington
  • 30/05/2014
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Homebuyers’ resistance to soaring prices cools property market
Prospective property buyers are showing a greater resistance to spiralling house prices causing a cooling effect on the housing market, Hometrack data has shown.

House prices increased 0.5% in May which is 0.1% lower than the rise seen in the previous two months and 0.2% lower than February 2014.

In London, price rises continued to slow down as the growth rate fell from an average of 0.8% per month over the last six months to 0.6% in May.

Nationwide, the number of postcodes which experienced a rise in value slipped from 50% in March to 42% in April.

Richard Donnell, director of research at Hometrack, said: “Strong price increases, widespread talk of a possible housing bubble and recent warnings from the Bank of England on house price inflation are starting to test the resolve of buyers.”

Donnell said that while London may have led the recovery the opportunity for continued house price growth is being found in the lower value areas of the London market.

In May, house price growth in central London was 0.2%.

Houses are lingering slightly longer on the market averaging 6.5 weeks in May compared to 6.3 weeks in April.

And the proportion of the asking price achieved has started to plateau as the market starts to resist higher prices.

The latest figures show an average of 96.8% of the asking price is being achieved – the highest level since September 2002.

“The implementation of the Mortgage Market Review looks to be perfectly timed as stronger affordability checks will limit the ability of households to get ‘carried away’ by talk of housing recovery,” said Donnell.

“There are already signs of slower activity in the mortgage market and we expect to see further signs of slowing house price momentum in the months ahead.”

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