The rising value of sterling and lower bonuses in the City of London this year may have contributed to the relative weakening of growth in the capital.
This month saw a significant contrast across the leading indicators of house price growth. In the same month the steepest ever fall in house prices recorded on one index and a sixth consecutive increase in prices on another.
The eight indices tracked by the Poll of Polls lead to the following two conclusions: Firstly, the pace of house price growth has indeed deteriorated since the resumption of growth after the recent slump. Secondly, any falls in house prices over recent months have been inconsistent and lack the pace associated with the beginning of the recession in 2008.
Whether or not the sluggish pace of house price growth continues, deteriorates or improves is still highly uncertain. Further light on the extent and location of cuts to public expenditure will be revealed on 20 October. The outcome of this widely anticipated event could be to prompt the Bank of England to pick up where it left-off with its quantitative easing programme almost a year ago.
Robert Bartlett, Chesterton Humberts’ CEO, said:
“The low level of transactions throughout the country makes it extremely difficult to see trends although the Chesterton Humberts/cebr House Price Poll of Polls gives us a better indication than any single index of the current market situation.
“The continuing drought in mortgage finance means that a traditionally quiet August seems to be heading straight into a quiet holiday period without the usual bustle of an autumn market. Overall, there is still no sign of any dramatic downturn in values, although the low trading activity levels may be skewing the outlook for London especially.”
“Lack of finance is trapping both buyers and sellers and once again leading to a rise in the numbers of “accidental landlords”, sellers who are unable to achieve desired prices and are therefore taking advantage of the tight lettings market.”
Douglas McWilliams, Chief Executive of CEBR, said:
“The extent to which the UK fiscal crisis has been addressed will become more obvious at the end of this month when firm and fixed spending budgets are set for each government department for the next four years. The completion of the change in policy from fiscal stimulus to monetary stimulus is therefore paramount. The latest economic data add to pressure on the Bank of England to resume its programme of asset purchases at some stage over the next few meetings. This will help to lower borrowing costs further and should provide further reassurance to otherwise hesitant buyers.”
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