London may have seen its fastest rises since the 80s but even in the capital the notion that uncontrolled price rises are fuelling a national bubble is misplaced – obvious to anyone in the UK living outside of London and the South East.
Indeed with our own new buyer registrations now at much more manageable levels, statistics are suggesting the demand for housing is abating and back to normal levels.
Combined with recent manufacturing data, interest rate rises this side of an election remain an outside bet.
British house prices slipped unexpectedly last month after rebounding in May, although on an annual basis price growth continued to increase, a survey from mortgage lender Halifax. House prices fell 0.6% in June compared with the month before, when prices rose 4%.
Some argue that what looked like a recovery in the UK is now looking more like the beginning of stagnation, as according to RICS, fears of an overheating market have resulted in demand for new homes falling in London for the first time since June 2012.
Rightmove reported that prices in London fell in June as a consequence of prices hitting a ceiling. Without the high multiples of mortgages available, few buyers will be able to meet higher asking prices unless they happen to be cash buyers.
Of course, the opportunity remains for overseas investors and speculators but even they will note the prospect of prices hitting an affordability ceiling in London.
House prices in the capital could not keep rising as they were. At some point, either buyers will be unable to afford property or investors will be unwilling to accept falling yields and capital appreciation can’t carry on forever – regardless of the currency you use. We are not facing a meltdown, simply a drawing of breathe and the normalising of an excitable market.
Robin Johnson is managing director at KFH Chartered Surveyors
