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London house prices could drop further over the next three months
House price momentum has gone back 16 months.
According to the latest Royal Institution of Chartered Surveyors (Rics) report, this is the third straight month that demand has slipped.
Simon Rubinsohn, chief economist at Rics, said expectations were that prices in London could drop over the next three months, as a greater balance between supply and demand would remove some of the upward pressure on prices.
He also indicated that he expected growth elsewhere in the UK to be around 2.1 per cent over the coming year.
This comes on the back of recent reports of slowing growth or even price drops from Halifax and Nationwide, both of which produce monthly indices.
Rubinsohn said the effect was particularly pronounced in the capital.
In London, caution took a particular toll, with prospective new buyer demand seeing its fifth consecutive monthly decline – a trend not seen since April 2012.Demand and supply are looking a little more balanced, which is removing some of the upward pressure in prices, particularly in London.
The survey also suggested the Independence referendum had affected sentiment north of Hadrian's Wall:
In Scotland, the effects of the referendum on independence appeared particularly significant, with a net balance of 6 per cent more surveyors reporting a drop in the number of interested buyers (compared to a net balance of 49 per cent seeing more interest in August).
The changes in the market are not necessarily a cause for concern. If a better balance is achieved between supply and demand then prices should slow, beginning to close the huge gap between house price inflation and wage growth.