July saw the first monthly decline in demand for new homes since January 2013, according to the Royal Institution of Chartered Surveyors’ residential market survey, which showed house price growth across the UK moderating.
A net balance of 49 per cent more respondents reported an increase in prices in July, down form 52 per cent in June and 56 per cent in May, data from Rics show. However, the supply of new properties coming onto the market increased for the second consecutive month, according to the survey.
Last month, Rics blamed the MMR and Bank of England for cooling house price inflation. Earlier this week, the CML agreed that the new affordability rules under the MMR regime had acted as a “gentle dampener” on the market.
Across the country as a whole sales expectations remain positive, Rics said, although the data showed that this was a little less so than previously.
Results showed that for London both sales and new buyer demand fell more sharply than elsewhere - enquiries fell at their fastest rate since April 2008 - and a net balance of 10 per cent more respondents reported an increase in prices, down from 30 per cent in June.
Despite the decline in sales, prices are still projected to rise nationally over the next year, the survey found. Prices are now expected to increase by 2.6 per cent on a 12 month view, compared with around 4 per cent at the start of the year.
However, Rics said lenders are now “a little more circumspect in providing finance to the more expensive parts of the market”.
Simon Rubinsohn, chief economist at Rics said: “A range of policy initiatives adopted by the Bank of England in recent months alongside heightened expectations surrounding a turn in the interest rate cycle has clearly had an impact on sentiment in the market.
“The shift in the mood music amongst potential buyers in the London market has been particularly pronounced but that is in a sense consistent with the move to a more sustainable market in the capital.”
“Elsewhere around the country, the market in general is showing a greater degree of resilience, but that largely reflects the fact that in some areas the recovery has only recently taken hold and affordability is rather less stretched.
“Significantly, members now expect price gains over the next year to be faster outside of the Capital, than in it.”
