London house-price growth will slow to about 3 percent next year as the prospect of higher borrowing costs forces sellers to lower their expectations, Hamptons International said in a report today.
The 2015 forecast by the London-based broker is half the pace it predicted in September. Values in the city will probably climb 15.5 percent this year, it said, more than double its previous prediction.
London’s residential property values rose at their slowest pace in 15 months in June, after leading the surge in British house prices in the past year, the Royal Institution of Chartered Surveyors said last month. Surging values in the U.K. capital prompted the Bank of England to limit riskier mortgages and introduce tougher affordability tests. The number of people saying the next 12 months is a good time to buy a U.K. home fell to the lowest since 2011, a survey by Lloyds Banking Group Plc showed last month.
“Despite a strengthening economy, there is now evidence of a change in sentiment across the country brought about by increasingly strong messages from the Bank of England culminating in the implementation of more stringent affordability regulations,” said Fionnuala Earley, director of residential research at Hamptons.
Home prices across England and Wales will gain 8 percent this year and 5.5 percent in 2015, Hamptons said. The broker expects values in London’s most expensive boroughs, Kensington & Chelsea and Westminster, to rise 10 percent this year, up from its September forecast of 3 percent. Next year’s growth will amount to 3 percent, the firm said.
Hamptons based its forecasts on data compiled by the Land Registry in London.