London house price growth will slow after the UK voted to leave the European Union, Hometrack’s insight director Richard Donnell has predicted.
According to Hometrack’s UK Cities House Price Index London growth stood at 13.7% in June despite signs of activity dropping off, as in the past three months 8% fewer homes were sold compared to the 12 month average.
For the UK as a whole house price growth plateaued at 10.2%, the same as in May.
Donnell said: “The headwinds that were facing the London market in the lead up to the EU referendum have intensified on the back of the vote to leave and are resulting in slower sales rates.
“It is still early days, and seasonal factors also need to be considered but the growth in new listings and slower sales points to slower price growth in the months ahead.
“This growth in supply reflects a mix of new homes filtering through from London’s expanded development pipeline, investors looking to take capital gains, or selling to de-leverage their investments following the reduction in tax relief on mortgage payments for buy-to let investors.
“In contrast, in many large regional cities, sales appear to have held up thanks to a combination of much better housing affordability, improving economic growth and record low mortgage rates helping to stimulate demand.”
Bristol remained the fastest growing city in the UK, (14.7%) followed by London and Cambridge (11.5%).
Glasgow, Manchester, Liverpool and Leeds registered strong growth in Q2 on the back of more affordable prices, lower interest rates, improving local economies and higher yields for investors.
Donnell added: “The reality is that it is still very early days to assess the true impact of the Brexit vote on the housing market.
“Our view remains that sales volumes are likely to slow and price growth will moderate over the second half of the year.
“The severity of a slowdown will depend upon the response of consumers and businesses to the uncertainty created by the decision to leave the EU and the impact this has on the economy.
“The early market activity data confirms our view that London will bear the brunt of any slowdown.”