Yet more evidence London's property market is finally cooling down

As home-hunters flee the capital for commuter country, overheated property prices are finally starting to cool off.

by Rachel Savage
Last Updated: 23 Sep 2014

Bemoaning high property prices had, once again, become an obsession for Londoners in the last few years, as a surge in foreign demand for a capital pad, coupled with the economic recovery, pushed prices ever upwards. The good news, for buyers and the economy, is evidence is gradually mounting that the overheated growth is finally starting to cool off.

Property prices are expected to rise 1.9% in the next year, according to a survey of property surveyors by industry body RICS, a sharp decrease from the 7.4% they forecast back in March. Back in October, 100% of London-based surveyors said they’d seen house prices go up in the previous three months. In July, the net balance (those reporting an increase minus those reporting a decrease) was 10%.

That fits with recent research by LSL Property Services that found prices in four of the five most expensive London boroughs had started dipping, despite average capital property prices leaping 15.6% in the year to June.

It looks like supply and demand is balancing itself out. There had been a glut of wannabe buyers, followed by sellers rushing to market, tempted by the rocketing prices. Now those same prices are putting many prospective buyers off, many of whom are fleeing to commuter country. Back in April, estate agent Savills said prime property prices in London’s suburbs were outstripping central ones.

In the rest of the UK, house price growth looks to be moderating too. In January, surveyors thought country-wide prices would go up 4% in the next year. Now they think it’ll be 2.6% in the next 12 months. That’ll please Bank of England governor Mark Carney, who’s been holding off raising interest rates despite warning about the housing market.

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