South East: Housing market responds to Bank of England warnings, according to RICS
House prices in June remained positive in the South East, but the Mortgage Market Review (MMR) and the BoE rhetoric are dragging on activity, according to the latest RICS Residential Market Survey.
In the South East, a net balance of 74% of respondents reported an increase in prices in June (from 79% in May) with the region experiencing the strongest price gains for the second consecutive month alongside Northern Ireland. Meanwhile, the rate of price growth in the London market also appears to be easing.
Demand for property in the region remains positive, but at a slower pace with 12% of chartered surveyors seeing a rise in new buyer enquires compared to 33% in January 2014 and 69% November 2013. Demand across the UK stands at its slowest pace since the beginning of 2013, with buyer demand falling for the second consecutive month in June. However, this follows 15 successive monthly increases.
The slower trend in demand has also been reflected in the newly agreed sales balance in the region – a good indicator of market activity – which is showing the most subdued pace of increase since November 2012.
Looking ahead, as a result of the change in sentiment in the market, the number of respondents expecting prices to rise, rather than fall over the next three months, dropped to a net balance of 33% (from 52% in May).
Simon Rubinsohn, RICS chief economist, said: “The Bank of England’s recent introduction of a ceiling on high loan to income lending and a 3% interest rate stress test is unlikely on its own to have an immediate influence on the market. However, rhetoric from key officials at the Bank including Mark Carney alongside the consequences of the introduction of the MMR is already slowing momentum particularly in London.
"Buyer enquiries in the capital are now slipping back which suggests that the very sharp upward move in prices will flatten over the coming months. Elsewhere around the country we believe the more hard fought recovery should remain intact."
