Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Has London's housing market just popped?

Has London's housing market just popped?

Will the London house price boom end in a bang or a whimper? Evidence was leaning toward the former this month as a series of indicators appeared to begin to describe the second leg of a parabola.

The Rightmove price index and the Royal Association of Chartered Surveyors poll are qualitative, sentiment-led and volatile. But the depth and apparent correlation of their falls suggest they should not be discounted too quickly.

 

Rightmove’s month-on-month London asking prices and the Rics’ new buyer enquiry index both fell in July at their fastest pace since 2008, as 12-month price expectations among surveyors also slid. Despite some seasonality in that, the nationwide fall in house prices stood at a record for August

 

Both appeared to confirm earlier anecdotal evidence from estate agents that a combination of Bank of England (BoE) mortgage controls, and houseprices which hit 15x average national incomes earlier this year, have finally broken the ability of Londoners to keep this particular gravy-train rolling.

The market has been further eroded by consumer expectations of future interest rate rises, which recently hit their highest level since 2011, and a property development boom which is slowly but inexorably adding supply to the market.

BoE controls on borrowing – or simply the threat of them – appear to have been the most decisive, however. Ever since the Bank assumed its new powers in March, mortgage lending has steadily weakened. While the formal launch of controls on price multiples in June post-dates the most recent BoE credit data, anecdotal evidence revealed the brakes are only now just beginning to kick in.

In an interim statement this week, covering the three months to the end of June, Nationwide reported a 10% fall in net mortgage lending versus the same period of 2014. Simultaneously it reported a 117% increase in pre-tax profit due to a big boost to its interest margin. 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play The CEO tapes: 'the only reason you get fired is relationships'

The CEO tapes: 'the only reason you get fired is relationships'

In today’s instalment of the CEO tapes, four top asset management chief executives discuss corporate culture and how to ensure you get it right.

1 Comment Play The CEO tapes: the 'laddish' fund manager culture

The CEO tapes: the 'laddish' fund manager culture

In the first of 10-part series, four of the UK's best known fund bosses discuss the sensitive issue of female representation across the industry.

Play Video exclusive: Martin Gilbert grilled on Standard Life deal

Video exclusive: Martin Gilbert grilled on Standard Life deal

In this revealing interview, Aberdeen's boss offers the inside story on his firm's mega merger with Standard Life.

Read More
Your Business: Cover Star Club

Profile: how Cerno was forged in Asia's boom and bust

Profile: how Cerno was forged in Asia's boom and bust

Cerno Capital’s investment philosophy was born in the spectacular boom and bust of Asia in the 1990s.

Wealth Manager on Twitter