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UK property prices fall for first time in 2014


Property prices in the UK have fallen for the first time in 2014, according to a report by online property company Rightmove.

The average asking price for a property in the UK fell by £2,116 in June to £270,159, according to the report.

House prices in the North and East Midlands were affected the most as they fell by around 1.9 per cent overall, whereas Greater London prices fell by a modest 0.4% in comparison.

The annual growth rate for the 12 months to July was measured at 6.4 per cent, whereas the growth rate for the same period leading up to June was 7.7 per cent.

The fall in housing activity could be a result of efforts from the Bank of England to cool the market.

Mark Carney, governor of the Bank of England took action in recent months to avoid reckless lending that could lead to another housing crisis.

He has introduced new regulations which included making it more difficult to be approved for a mortgage. These regulations now mean that applicants have to prove their finances can withstand a 3 per cent increase in interest rates.

Additionally, he has also limited the amount of ‘risky’ loans where the amount lent is over 4.5 times a borrower’s annual income. As a result, this kind of loan can only account for up to 15 per cent of a banks total loans.

Miles Shipstone, an analyst at Rightmove, suggested that the price fall may be partly due to the summer being a traditionally quite period for the housing market. However, he also commented on the introduction of tighter regulations to the market by saying: “Buyer confidence may also have taken a knock with suggestions that mortgages are becoming harder to get, and repayments may get more costly sooner than originally anticipated, should the rumours of an interest rate rise before the next election come true.”

The report by Rightmove found that whilst the second half of 2014 is likely to be slower than the previous six months, it is still likely that there will be “an 8 per cent national increase in new seller asking prices”. This is largely because of third-time movers re-entering the market with larger deposits, combined with “lenders still having lending targets to meet”.

Supply crisis

Despite the fall in house prices, some believe that a lack of supply could result in price growth continuing in the second half of the year.

Online estate agent, eMoov, found that 75 per cent of the homes made available on the market in the London borough of Bexley in the second quarter have now been sold, meaning that supply in the area is running dangerously low.

This supply crisis now appears to be spreading to other surrounding areas as people look to get more for their money.

The findings from eMoov found that several areas outside of central London are seeing the majority of their housing supply being purchased.

An example of this is Bromley, which was previously the 18th most popular area in the UK to buy a home. As a result of people looking to the surrounding areas of Central London, Bromley is now the sixth most popular area to move to in the UK, as 62 per cent of the housing stock available in Q2 has now been purchased.

Other areas which appeared to exhibit similar levels of popularity included Milton Keynes, Portsmouth and Bristol, which all displayed supply-demand ratios of under 50 per cent.

Russell Quirk, founder of eMoov said: “A supply-demand ratio of under 50pc is detrimental. That’s the tipping point between a sellers’ market and a buyers’ market. Conversely, when we see areas achieve ratios of 65pc plus, they tend to be overheating and that impetus is unsustainable which is why we’re seeing just about all London areas cool.”

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