U.K. House-Price Growth Hits Five-Month Low as Demand FaltersFergal O’Brien
U.K. house prices rose at the slowest pace in five months as buyers became more cautious on the outlook for the property market, Hometrack Ltd. said.
Values in England and Wales increased 0.3 percent this month, the least since January, the London-based property researcher said in a report published today. That followed a 0.5 percent jump in May. Demand was unchanged on the month, while the number of properties listed for sale rose 1.9 percent.
The latest signs of a property slowdown come a day after Bank of England Governor Mark Carney announced measures to limit risky mortgages and prevent an unsustainable buildup of consumer debt. Earlier this month, Rightmove Plc reported an easing in home-price inflation and the BOE said new lending rules introduced in April may restrict mortgage approvals.
“Pent-up demand has been feeding into the market over the last 18 months, creating the upward pressure on house prices,” said Richard Donnell, director of research at Hometrack. “This trend now appears to be running out of steam.”
Donnell said recent Hometrack surveys pointed to buyer resistance to ever-increasing prices amid talk of a possible housing bubble. As well as pushing some potential buyers from the market, those concerns prompted a response from the BOE. The central bank yesterday put a cap on high loan-to-income mortgages and set a new affordability test for borrowers.
Some caution may also have been prompted by concern that interest rates may rise after Carney said this month that the BOE may begin tightening monetary policy earlier than investors anticipated. Donnell said such talk “compounded the impact on sentiment.”
In a separate report today, GfK NOP Ltd. said its sentiment index rose 1 point to 1 this month, the highest reading since March 2005. While consumers’ outlook for their personal financial situation over the coming year deteriorated, their assessment of the outlook for the economy improved.