Its latest monthly report says that a lack of supply continues to support pricing levels but the growth in demand is also starting to moderate.
While house prices continue to rise in London, there has been a continued slowdown in the rate of growth with prices up 0.6% in May, versus an average increase of 0.8% per month over the last six months.
The data suggests that in London the impetus for growth is emanating out of the lower value markets which offer better value for money. In central London prices were up just 0.2% in May.
The figures from the May National Housing Survey also shows that the time on the market averaged 6.5 weeks, up slightly on April 2014 when it was 6.3 weeks.
The proportion of the asking price achieved is starting to plateau as the market starts to resist higher prices and currently averages 96.8%, the highest level since September 2002.
The balance between supply and demand leads underlying house price changes by three months. The supply/demand balance has been extended in the last six months but in May 2014 the gap is starting to narrow.
‘House price inflation is starting to moderate both in London and nationally. The proportion of postcode districts with price increases slipped from 50% to 42% of market in May. This led to a slowdown in overall house price growth,’ said Richard Donnell director of research at Hometrack.
He pointed out that signs of this slowdown in momentum were present in Hometrack’s monthly national housing survey in April which identified early signs of growing price resistance on the part of buyers in London.
‘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. London has led the recovery but the impetus for growth is emanating out of the lower value parts of the London market. In Central London house price growth has slowed significantly in the last year and was just 0.2% in May,’ explained Donnell.
He also pointed out that as the recovery spreads from London across the country house price inflation will be driven by mortgage reliant demand which is a key area of concern for the Bank of England. ‘The implementation of the Mortgage Market Review (MMR) looks to be perfectly timed as stronger affordability checks will limit the ability of households to get carried away by talk of housing recovery. There are already signs of slower activity in the mortgage market and we expect to see further signs of slowing house price momentum in the months ahead,’ added Donnell.
