House price growth in the capital is set to slow down this month as potential buyers are beginning to be dissuaded by high house prices and rising interest rates.
Though property prices in central London rose by 3.1% in June, it is predicted that this growth will slow in July.
Estate agents, Knight Frank, said that the number of people applying to buy property fell by 5.5% in June, suggesting that people are holding out until house price growth begins to slow.
The higher end of the housing market seems to have been driving the general growth figures upwards properties priced at £4m and more had an average price growth of 43% in the past twelve months, while those priced under £1m grew by just 1.6%.
The UK property market in general is also showing signs of slowing down with a survey showing that recent rate rises are having an impact.
The Royal Institution of Chartered Surveyors said only 10.6% of surveyors reported price rises in June, down from 22.5% in May. This latest figure is the lowest since January 2006.
Statistics from the Department for Communities and Local Government also suggest that higher interest rates are beginning affect some regions, with annual prices at 10.9% in May, down from 11.3% in April. The average house price was £211,056 in May.
Across the country as a whole, annual gains remained in double digits, but these figures were boosted rising prices in London, Scotland and Northern Ireland.
According to Howard Archer of Global Insight:
“These three regions continued to record annual house price growth of over 10 per cent in May. However, of these three, London was the only one not to see moderation in house price inflation from the previous month.”