The results has been a fall in new buyer registrations and an increase in new properties coming onto the market, according to the research by property firm Knight Frank.
It reports that new buyer registrations are down by a fifth and new supply up by a third in the second quarter of the year compared to the same period in 2013.
‘To some extent, buyers have also become more restrained after a period of relatively strong price growth with sealed bids and open days becoming less prevalent, explained Tom Bill, head of London residential research at Knight Frank.
However, he pointed out that whatever the validity of buyers’ concerns about the sustainability of price inflation, it is worth highlighting that annual growth in prime outer London residential prices only exceeded 5% a year ago and moved into double digits in January this year.
The amount of available stock in prime outer London in June was 19% higher than June last year and at its highest overall level in more than five years. Annual growth in prime outer London was 12.1% in the year to June after a monthly rise of 1%, which compares to 8.1% in prime central London.
‘There is an overlap of factors causing demand to slow in both markets but the prospect of an interest rate rise is likely to play a stronger role in prime outer London,’ said Bill.
Wandsworth and Clapham recorded the highest annual growth of 17.2% followed by 15.8% in Canary Wharf.
‘There are tentative signs the prime outer London rentals market will benefit from softening demand in the sales market. It is an emerging trend in the prime central London market as the economy stabilises and companies expand,’ explained Bill.
The report also shows that rental values grew 0.7% in June, which was the highest monthly increase since the index was produced on a monthly basis in April 2011.
It mirrored a similar record monthly jump in prime central London in June but growth still remains more erratic in outer London and was 0.4% down over the second quarter and 0.5% down over the last year.
