First signs of housing market slowdown

Two sets of industry data published yesterday suggest that house price growth is finally starting to slow.

Nationwide's figures showed annual house price growth cooling slightly in April with an annual rise of 4.9%, down from 5.7% in March.

Latest Land Registry data for March showed with a slight month-on-month drop in prices of 0.5%.  

Brian Murphy, head of lending at Mortgage Advice Bureau, said buy-to-let investors and those affluent enough to bring forward their second home purchase to beat the 1 April stamp duty surcharge may have negotiated a lower price based on their cash buying power.

He said the forthcoming Brexit referendum on 23 June may also have made buyers more cautious.

“It wouldn’t be a surprise if annual house price growth continues to tick over at or around 5% due to lack of supply, meaning that sellers are still in the driving seat in terms of achieving their asking price.”

Murphy said that slowing growth may bode well for first-time buyers and those moving up the ladder from an affordability perspective, especially when combined with mortgage interest rates at or close to all-time low levels.” 

Jeremy Duncombe, director, Legal & General Mortgage Club, said: “It is not surprising that the rate of growth eased off in April, as the surge in people looking to complete transactions ahead of the stamp duty regulations came to an end.

“That being said property prices in this country continue to rise annually, far outstripping the pace of wage growth.”

Jeremy Leaf, a former RICS chairman and north London estate agent, said: “The month-on-month fall in the average house price is not a surprise as the market is gearing up for a change.

“On the ground we want to see more balance between supply and demand.”

Richard Sexton, director of chartered surveyor e.surv, said: “House prices are struggling right now, having failed to pick up following last month’s dip.

“While a strong lending environment is helping prospective buyers, the affordability of current high prices is proving a final hurdle to homeownership. Slow and steady is the mantra.”