London house-price outlook slides as 'spooked' buyers stay away

[LONDON] Real-estate agents in London are at their most downbeat since at least 2010 as the British capital remains the weakest spot in a slowing market.

The UK market as a whole lacked momentum in September as the prospect of the Bank of England raising interest rates added to buyer caution, the Royal Institution of Chartered Surveyors said in a report published Thursday. That was most acutely felt in London, where prices fell and expectations for the next 12 months hit their weakest since the survey began seven years ago.

While prices nationally grew marginally last month, agents were pessimistic, at least in the shorter-term, with three-month expectations becoming increasingly negative, RICS said. New buyer inquires and agreed sales volumes slid to the lowest level since the direct aftermath of the Brexit vote.

Buyers are "definitely spooked" in London, according to Michael Fiddes at agents Strutt and Parker, while data from researcher Lonres suggests there are few signs that the pound's decline since the European Union referendum last year is attracting foreign buyers.

Homes in London and southeast England, which have seen the strongest price gains in recent years, are now widely seen as overvalued, according to RICS.

Northeast England and East Anglia also saw negative readings in September, while price growth remained robust in Wales, northwest England, Scotland and Northern Ireland. There were broad signs of optimism on a 12-month basis, with London the only area with a negative outlook.

"It was always questionable to talk about the housing market as a single entity but the stark divergence in key readings from the latest RICS survey demonstrates in the clearest possible terms just how important the regional narrative is at the present time," said RICS Chief Economist Simon Rubinsohn. "It is perhaps also indicative of a shift in economic momentum in the face of the increasing possibility of the first hike in base rates in over 10 years."

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