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London House Price Growth Predicted to Cool

12 August 2014

London house price growth will slow to about 3 percent next year as the prospect of higher borrowing costs forces sellers to lower their expectations, says a report by leading London agents Hamptons International. The 2015 forecast is half what was predicted only last September. Albeit values in the city will probably rise by around 8 percent this year, it said, more than double the previous prediction.   The announcement has been picked up by Bloomberg, which reports that London’s residential property values rose at their slowest pace for 15 months in June. Surging house prices in the capital, as well as across much of the rest of the country, has prompted the Bank of England to impose new restrictions limiting riskier mortgages and introducing tougher affordability tests. The result is that fewer people now believe that the coming year will be a good time to buy a UK home than at any time since 2011. “Despite a strengthening economy, there is now evidence of a change in sentiment across the country brought about by increasingly strong messages from the Bank of England culminating in the implementation of more stringent affordability regulations,” said Fionnuala Earley, Director of Residential Research at Hamptons. Home prices across England and Wales are expected to rise 8 percent in 2014 but only 5.5 percent in 2015, says the Report. That said there remains very strong demand for premium properties and areas. Hamptons believes that values in London’s most expensive boroughs, Kensington & Chelsea and Westminster, will rise 10 percent this year, up from its September forecast of 3 percent. Albeit next year’s rise will likely be in line with general market trends, they predict. SOURCE -  

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