Figures for July from RICS showed the first decline in demand for property since January 2013, while the supply of new properties coming to the market for sale increased for the second month running.
The changing supply/demand momentum fed through to a slowdown in property price growth, with 49% of RICS surveyors reporting a rise in house prices in July, down from 52% in June and 56% in May.
After a red hot first half of the year, both sales and demand fell more sharply in London than anywhere else, with a net balance of 10% more surveyors reporting house price growth, down from 30% in June.
However, across the country the average number of property sales recorded per RICS surveyor in July increased to 24.6, up from 21.1 in January and RICs said that sales expectations remain positive overall, if a little less so than previously.
Simon Rubinsohn, chief economist at RICS, described the housing market as having ‘paused for breath’, and added:
“While there is a little more member caution reflected in the comments, prices are still projected to rise nationally over the next year and expected to increase by 2.6% on a 12 month view (compared with around 4% at the start of the year). Surveyors in Scotland appear most optimistic, anticipating a price gain of 3.3%.”
The RICS report for July also showed that lenders are now approaching the top end of the market with a little more caution than previously. The average loan-to-value (LTV) on a mortgage offered in London remained below 78% for the second month running, compared to an average of 81% at the start of the year.
Charles Haresnape, Aldermore’s managing director for mortgages and commercial lending said: “The recent survey from RICS confirms a moderation in the housing market which understandably is consistent with mortgage data.
“This is good news for a sustainable housing market but focus must continue on increasing housing supply as that is the only way house price inflation will be controlled over the long term.”