House price growth coming to a standstill, say surveyor

House price growth is slowing to a standstill, with London and the South East applying the brakes, according to surveyors.

A net balance of 1% of surveyors reported prices increasing rather than decreasing in July, down from 7% in June, according to the Royal Institution of Chartered Surveyors. July's reading was the weakest since March 2013.

Top-end homes are particularly likely to have had money shaved off the original asking price before being sold.

Across the UK, there are diverging trends. House prices remain "quite firmly on an upward trend" in some areas, led by Northern Ireland, the West Midlands and the South West, Rics said.

By contrast, house prices continue to fall in London. The South East also recorded a negative price reading, which was the weakest for the region since 2011.

The July survey also found that, over the previous two months, there had been a particular gap between the original asking price and the agreed selling price when it came to homes at the top end of the market.

For homes marketed at more than £1 million, more than two-thirds (68%) of those surveyed reported sale prices coming in below asking prices.

For homes listed at between £500,000 and £1 million, 57% had noted sale prices lower than asking prices.

Just over a third (37%) said homes marketed at less than £500,000 were sold for less than their original asking price.

Sales activity continues to lack momentum and expectations for the coming months are “virtually flat”, Rics said.

Simon Rubinsohn, chief economist at Rics, said recent tax changes and a lack of new homes after the financial crisis are weighing on the market.

He said: “Sales activity in the housing market has been slipping in the recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come.

“The flatter trend in price growth is arguably a silver lining but there is no real indication that the housing market will become materially more affordable any time soon.”

Andrew Matthews/PA Wire