London House Prices Back on the Rise?

UK house price growth may be easing, according to the latest Halifax data, but it has been suggested that there are signs emerging that property price rises are set to pick up pace once more.

UK house prices rose 0.4% in July after a 0.9% contraction in the previous month, the mortgage lender said. The average price of a British home is now £219,266 according to the index.

According to Britain’s largest mortgage lender, annual house price growth has slowed to the lowest rate in four years. The newly released figures from the Halifax, based on its own mortgage lending statistics, also reveal that house prices in the second quarter of this year were 0.2% lower than the previous quarter, which is the worst quarterly performance in almost five years.

“There was a time when four falls in a row would have set alarm bells ringing. But so far all the indications are that the market is seeing a cooling rather than a correction,” said Jonathan Hopper, managing director of Garrington Property Finders.

“The speed of price growth has slowed substantially, and at a national level average prices are still flatlining rather than falling,” he added.

Despite the recent slowdown, Halifax, which is owned by Lloyds Banking Group, said home price growth was still underpinned by low mortgage rates and a shortage of homes for sale.

Ishaan Malhi, CEO and founder of online mortgage broker Trussle, said: “On the face of it there seems to have been a slight dip in house prices during Q2 as buyers’ income continued to be squeezed, while the election will have also put some people off making big purchases. Prices are however back on the rise again now, perhaps because inflation has put less pressure on people’s pockets during the last couple of months.

Further to this, Zoopla Property Group has revealed that the number of vendor leads it has passed on to its agent customers has increased by a third just days after OnTheMarket announced it is to raise £50million via a flotation on the London Stock Exchange’s AIM.

‘Third portal’ OTM are looking to float the firm for a cool £50million. Source: OnTheMarket.com

Zoopla Property Group (ZPG), which operates Zoopla and PrimeLocation, the UK’s second and third largest property portals in the UK by the number of agents listed on its sites and traffic, says it has so far sent 300,000 vendor leads and over 13.7 million applicant leads to its members so far this year.

Leads from vendors seeking an agent to sell their home increased by 31% compared to the first six months of last year, according to the portal giant. Mark Goddard, MD of the firms Property division said, “(ZPG) continues to generate more appraisal leads than any other website as a result of (our) unique valuation tools”.

“We continue to deliver the best value and most effective marketing solutions for our members, giving them a unique advantage in marketing their existing listings and winning new business.”

But the OnTheMarket flotation received a mixed response from the City. One analyst told the Financial Times that he had “many questions [including] has Agents Mutual lined up new agents to join ahead of the IPO process? Will institutional investors support a valuation of £200m-250m for a loss-making number three portal lagging in traffic share?”

DMZ thinks the squeeze on spending power, together with the impact on property transactions of the stamp duty changes in 2016 now being realised, along with affordability concerns, appear to have contributed to weaker housing demand. However, a continued low mortgage rate environment, combined with an ongoing shortage of properties for sale, should help continue to support house prices in the short-term at least.

To read “The Secret Agents” view on the recent OTM floatation announcement, click here.

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