The closely followed RICS Residential Market Survey points to “some signs of moderating” of housing activity, particularly in London and the headline in the accompanying press release is “Stringent lending stems buyer demand”. The focus on our continuing theme of activity rather than pricing could hit market sentiment towards merchants and estate agents in particular, but could also dent the house builders.
Headline prices still rising, but expectations pared back
Prices are continuing to rise across the country, but the survey balance has stayed at around 50-60 for the last few months. London has moderated and the balance is now below England & Wales as a whole and well below the South East and East Anglia. Predictions of house prices over the next 12 months have fallen from +3.9% to +3.6%.
Key is activity gauges
New instructions to sell fell for the fifth month in a row (possibly explaining the continuing rise in prices), but they rose in London. New buyer enquiries are now rising, but at the slowest pace since February 2013 (and they fell in London for the first time since January 2013). Overall, agreed sales rose steadily (but were flat in London, the South East and Midlands). The RICS suggested the tougher scrutiny of loan applications following the Mortgage Market Review is weighing down loans-to-value.
Bank action behind London slowdown?
The generally cautious signals coming out of London may be the first sign that capping of high value loans to 4x income by Lloyds and RBS may be having an impact on the capital. The increase in sales instructions in London suggests some would-be sellers many be attempting to ‘call the top’. In our experience, the beginning of such trends can develop considerable momentum, ‘smoking out’ other potential sellers.
Osborne to focus on brownfield land
Chancellor George Osborne is predicted to use tonight’s Mansion House speech to reveal plans to increase building on brownfield land and possibly address concerns about house price inflation on financial stability, which may be price sensitive tomorrow.