London home prices stagnate as cooling measures bite

LONDON — Prices of homes in the British capital, once popular with overseas investors, have stagnated this month, the first month with no growth since December 2012, as demand plunged and properties took longer to sell, property researcher Hometrack said yesterday.

Hometrack’s survey of real estate agents showed home values were unchanged in the capital in July after increasing 0.5 per cent in June. Higher-value markets in the west of London and south-west slid, taking the number of postcodes registering declines to 11 per cent. Areas in the capital recording price gains slumped to 12.1 per cent from 40.6 per cent in June.

London had propelled UK home prices over the past year and the latest survey data adds to evidence that measures implemented to cool the housing market are working. The Bank of England introduced new curbs last month to limit riskier mortgages after rules came into force in April requiring tougher affordability tests.

“Seasonal factors always lead to a slowdown in demand and market activity in the summer months, but it is clear that there are bigger forces at work with a pronounced loss of momentum in the London housing market,” said Mr Richard Donnell, director of research at Hometrack. The slowdown is “in part due to warnings from the Bank of England and others of a possible house price bubble,” he added.

The rate of home price growth in London peaked at 1.1 per cent in February, the data showed. In July, homes took an average 4.3 weeks to sell, up from 2.7 weeks in March. The slowdown will probably linger as the market in the capital “cools rapidly,” the report said.

Across England and Wales, prices grew 0.1 per cent in July, compared with an increase of 0.3 per cent in June, making the slowest price growth since February 2013. The number of new buyers registering with estate agents fell 0.9 per cent. BLOOMBERG