UK housing market slows, propped up by people leaving London

Many buyers are buying bigger properties outside urban areas in anticipation they can work from home after the pandemic.
Many buyers are buying bigger properties outside urban areas in anticipation they can work from home after the pandemic.PHOTO: REUTERS

LONDON (BLOOMBERG) - British house price growth slowed in June as record prices and a lack of properties to purchase drained momentum from the market, Rightmove said.

The nation's largest online property portal said prices grew 0.8 per cent this month after a 1.8 per cent gain the month before, putting the average cost of a home at £336,073 (S$624,450). The increase is still the largest at this time of year since 2015, boosted by people seeking to leave London.

Bank of England policymakers have expressed concern about the pace of price growth, with chief economist Andy Haldane warning that the market is "on fire" and may feed inflationary forces.

Rightmove's report is the first this year to suggest any signs of a slowdown, though it also confirmed an appetite by many buyers to buy bigger properties outside urban areas in anticipation they can work from home after the pandemic.

"Lifestyle re-evaluations have taken firm root, which will lead to sustained demand, especially for rural and suburban locations," said Mr Nick Leeming of real estate agency Jackson-Stops. "We're still seeing people head to countryside hot spots in droves. While buyers remain active, the availability of stock on the market has continued to contract."

Strong demand is being sustained by top-of-the-ladder home seekers. The number of sales agreed for properties over £500,000 was up almost 50 per cent in May from the same month in 2019. Cash-rich buyers from more expensive areas are the driving force in places such as Wales and the south-west of England.

Earlier this month, the Royal Institution of Chartered Surveyors said prices in May rose in all regions, and agents anticipate that prices will continue to climb over the next year. The gap between buyer inquiries and sale instructions ballooned to its widest since 2013, it said.