London house prices stagnated in July, the first month with no growth since December 2012, as demand plunged and properties took longer to sell, Hometrack Ltd. said.
The survey of real-estate agents showed values were unchanged in the capital in July after increasing 0.5 percent in June. Higher-value markets in the west and southwest slid, taking the number of postcodes registering declines to 11 percent. Areas recording price gains slumped to 12.1 percent from 40.6 percent in June.
London had propelled U.K. house prices over the past year and today’s data add to evidence that measures to cool the market are working. The Bank of England introduced measures in June to limit riskier mortgages and new rules came into force in April requiring tougher mortgage-affordability tests.
“Seasonal factors always lead to a slowdown in demand and market activity in the summer months, but it is clear that there are bigger forces at work with a pronounced loss of momentum in the London housing market,” said Richard Donnell, director of research at Hometrack. The slowdown is “in part due to warnings from the Bank of England and others of a possible house-price bubble,” he said.
The rate of growth in London peaked at 1.1 percent in February, the data showed. In July, homes took an average 4.3 weeks to sell, up from 2.7 weeks in March. The slowdown will probably “linger” as the market in the capital “cools rapidly,” the report said.
Across England and Wales, prices grew 0.1 percent in July, compared with an increase of 0.3 percent in June. That makes this the slowest month since February 2013. The number of new buyers registering with estate agents fell 0.9 percent.
“The gap between overall supply and demand has narrowed sharply in the last three months, pointing to a reduction in the upward pressure on house prices,” Hometrack said. “The measure of demand has moved into negative territory.”
Buyers are also becoming more cautious amid the prospect of rising interest rates, Hometrack said. The BOE will probably increase its benchmark rate from a record low in February, according to futures contracts.