UK housing market pauses for breath, surveyors say

Houses Image copyright PA
Image caption The housing market has had a different slant in London to much of the rest of the UK

The housing market "paused for breath" across the UK in July and went into reverse in London, surveyors have said.

Demand for UK homes fell for the first time since the start of last year, according to the Royal Institution of Chartered Surveyors (Rics).

This, and sales, fell more sharply in London than elsewhere, while the number of homes for sale increased.

Concern over affordability was one factor for the shift, although prices were still expected to rise.

Surveyors suggested that property price growth was likely to be faster outside of London than in it.

"The shift in the mood music amongst potential buyers in the London market has been particularly pronounced, but that is in a sense consistent with the move to a more sustainable market in the capital," said Simon Rubinsohn, chief economist at Rics.

"Elsewhere around the country, the market in general is showing a greater degree of resilience, but that largely reflects the fact that in some areas, the recovery has only recently taken hold and affordability is rather less stretched."

Activity has slowed in the past after a so-called "Spring bounce" in the housing market, as potential buyers' thoughts turn to holidays in the summer rather than homes.

However, surveyors suggested that the market might have changed, owing to the prospect of higher interest rates and warnings from the Bank of England that it was keeping an eye on any risk of a housing bubble.

However, the Bank's governor, Mark Carney, may have eased the fears of some mortgage holders in the Bank's quarterly inflation forecast.

He said on Wednesday that whenever interest rates did increase, they would still do so gradually.

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