Residential Property Prices Only Increased By 0.5% Last Month
New data released by Hometrack shows that residential property prices only increased by 0.5% during May 2014, less than previous price rises recorded in the three previous months, suggesting a slowdown in property sales and price growth.
The data shows that the proportion of UK regions recording property price increases during May had fallen to just 42%, down from the 50% recorded in March and April 2014.
While property prices may have continued to rise in London, there has been an overall slowing in the rate of growth, with property prices only increasing by 0.6% in May, compared to the 0.8% average increase over each of the previous six months.
The main growth in London is in lower priced areas of the capital that are perceived as offering better value for money, however, central London prices only increased by 0.2% in May. Statistically speaking, Hometrack data shows that the proportion of asking prices being achieved is currently at an average of 96.8%, while the average time that properties are on the market before vendors agree to an offer is beginning to increase, now taking around 6.5 weeks, rather than the 6.3 weeks previously recorded.
Richard Donnell, Hometrack’s Research Director, said: “Strong price increases, widespread talk of a possible housing bubble and recent warnings from the Bank of England on house price inflation are starting to test the resolve of buyers,” says.
As the UK property market begins to conform to tighter mortgage lending criteria and affordability testing of all potential residential property purchases, sellers and estate agents are beginning to adjust their price expectations, double-digit annual property price increases are no longer sustainable.
The slowdown in the UK property market is being seen as an organic development and economists warn that it should not be tampered with by the government or the Bank of England ramping up interest rates or making mortgages more expensive as these moves could harm the UK’s property market in the long term.
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