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Economy / Jobs

Experts confirm London house price fall

Great news!/Terrible news (delete according to taste and level of wealth). From Reuters:

British house price growth slowed sharply in the three months to October to its weakest since May 2013, driven by more widespread price falls in London, a survey by the Royal Institution of Chartered Surveryors showed on Thursday.

RICS said its monthly house price balance fell to +20 in October from +30 in September… The drop was driven by a fall in the London index to -35 from -9 in September, representing the most widespread price falls in the capital in four years.

London was the only region surveyed to see a negative balance. 

It’s important to note that these numbers don’t represent the scale of any fall: they’re just an index of sentiment in the property industry, calculated using responses to a survey.

What they do show, though, is that the London boom has at the very least run out of steam. In 2013, demand from buyers outstripped supply of available homes, and prices rose. Those trends have now gone into reverse. 

RICS blames the talk of a mansion tax at the top end of the market, as well as tighter lending criteria making it more difficult to get enormous mortgages. The threat of interest rate rises could be at work, too.

These graphs shows the balance of industry opinion. Positive numbers mean more experts think prices will rise; negative ones mean the opposite. 

What they show is that, over the last three months, a healthy majority think that London house prices have been going down, rather than up:

A majority think they’ll continue to do so. Here, though, the consensus is weaker:

And RICS economist Simon Rubisohn warned against over-interpreting these figures as evidence of an imminent crash: “With new instructions still flat … it seems implausible that the dip in demand will result in very much of a decline in house prices”, he said. Roughly translated: there still aren’t enough houses on offer to meet demand. 
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