Is slowing house price growth indicative of maturing market?

 
Is slowing house price growth indicative of maturing market?

Ever since the housing bubble burst in early 2008, sending prices down time and again over a number of months, the property market has been in a period of recovery in the UK as it chased down the peak prices that were last seen in 2007. 

However, rising sentiment and an improved financial situation across the market and the country as a whole has meant that there are now more people than ever looking to get themselves a property, and this has meant prices rising at a rate that has sent alarm bells ringing in recent months. Experts have said that in London in particular, there is a risk that another housing bubble burst could be on the horizon.

Last week, we asked if the capital's property market was starting to mature at long last to stave off this threat, and according to a new study, this may well be the case.

Hometrack reports that the rate of house price growth across the UK has halved in the last quarter, with the figures for June showing a 0.3 per cent average increase - far lower than that seen three months earlier. 

London in particular has been maturing nicely, with the coverage of price growth in the capital the lowest level it has been for 16 months. 

A lower rate of price increase may be seen as a negative for some, but the fact that house valuations are slowing down their rates of growth can only be good for the market, showing that sustainability is now a real factor in the market and vastly reducing the chances of another bubble bursting. 

"As demand starts to cool so the rate of monthly house price growth has halved over the last three months. The proportion of the asking price being achieved has been steadily rising for the last 18 months but has now peaked as agents find it harder to sustain price rises," said Richard Donnell, director of research at Hometrack.

And with prices across the nation now starting to edge ever closer to those peaks that were witnessed in 2007, this can only be a good thing for the future sustainability of a market that looks primed to stave off the threat of a housing bubble.

Land Registry data has shown that in the year to the end of May 2014, the average house price across the nation grew by some 6.7 per cent. 

This meant that the price hit a level of £172,035, not far off the peak of £181,518 in November 2007, and as price growth starts to slow, it looks like we are about to reach a situation where we nestle gently into this level at just the right time.