LONDON (Reuters) - British house prices recorded modest growth last month, though they are still falling in London where expensive property is struggling to sell for its asking price, an industry survey showed on Thursday.
The Royal Institution of Chartered Surveyors’ house price survey held at +8 in December, beating economists’ expectations in a Reuters poll for it to slip to +5 and contrasting with renewed reports of falling prices from mortgage lender Halifax on Wednesday.
Annual house price growth has slowed to around 2-3 percent since June 2016’s vote to leave the European Union, though this masks widespread regional differences, with London and neighbouring regions seeing the most weakness.
“Divergent regional trends remain very much to the fore with the market in many parts of the country still actually behaving in a solid if unspectacular way despite the downbeat headlines,” RICS chief economist Simon Rubinsohn said.
This is not the case in central London, where property is hardest to afford relative to local wages and where RICS said prices were falling almost as fast as in November, when it recorded the broadest price falls since 2009.
Property priced at 1 million pounds or more - which is concentrated in London - was failing to sell at its asking price in two thirds of cases. Typically, discounts of 5-10 percent were needed for it to sell, RICS said.
Across Britain, new instructions to sell property fell by the most since May 2017, reflecting a slowdown in the market also seen in Bank of England data last week, which showed new mortgage approvals at a three-year low.
RICS said its members expected prices to be flat at a national level over the next three months, but to rise over the course of the year everywhere except London.
Even in London, the expected decline over the next 12 months was smaller than had been predicted before, RICS added.
Economists polled by Reuters at the end of last year on average forecast that prices would grow by 1.3 percent in 2018, but fall 0.3 percent in London.
Credit ratings agency Standard & Poor’s predicted on Wednesday that prices would rise by 0.5 percent this year and 1.5 percent in 2019, as a squeeze on household incomes from high inflation and sluggish wage growth proved slow to ease.
Reporting by David Milliken, editing by Andy Bruce