Values in London slipped 0.5 percent to an average 589,776 pounds ($999,700), the first decline this year, the property website operator said today. Prices in Kensington and Chelsea, Britain’s most expensive district, fell 0.3 percent to 2.38 million pounds. Across the U.K., they rose 0.1 percent, a less-than-average increase for this time of year.
“Parts of the London market are starting to run out of steam,” Rightmove director Miles Shipside said. “It’s an example to the rest of the country of what happens when affordability and common sense get stretched too far.”
The slowdown comes as Mark Carney prepares to lead a discussion among Bank of England financial-stability officials tomorrow on whether action is needed to prevent property from overheating. Rightmove said new tougher mortgage rules and a cooling in demand may have taken some momentum from the market.
Only a third of London’s 32 boroughs saw asking prices rise this month, Rightmove said. The largest increase was in Westminster, the second-most expensive district, where values climbed 3.5 percent. Prices in Haringey, north London, plunged 4.8 percent.
U.K. home prices have surged in the past year amid near record-low borrowing costs and a strengthening economic recovery. In London, values got an extra boost from cash-rich foreign investors seeking a haven. Rightmove’s report showed U.K. house prices have risen 7.7 percent in the past year, with London up 14.5 percent.
The surge has prompted warnings from both the BOE and international groups such as the European Commission. Carney said last week that housing debt is a concern and the government plans to give the central bank additional powers to curb mortgage lending. That may further restrict growth after the introduction of new rules in the Mortgage Market Review.
“Through luck or judgement it appears that the timing of the MMR, more property for sale in all regions, and a tail-off in pent-up buyer demand are alleviating some of the upwards price pressure,” Shipside said. “This will come as a relief to the governor of the Bank of England and the FPC.”
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