Yahoo Finance House Price Surge 'Taking Heat From Market'
There is further evidence that the surge in house price growth - particularly in London - will begin to ease.
Surveyors are reporting that the cost of homes, coupled with stricter mortgage lending criteria, are starting to take some of the strongest heat out of the property market, leaving purchasers more cautious.
The report by the Royal Institution of Chartered Surveyors (Rics) identified a halving of predictions for house price growth in the capital over the next five years among its members to 5% annually.
They reported that demand for London properties from prospective buyers slipped back last month for the first time since June 2012.
It brings the prediction more in to line with price expectations for the UK as a whole, Rics said, citing a lack of choice of properties and the prospect of rising interest rates as among other factors behind the slowdown in growth.
The findings were released in the wake of a report by Nationwide (LSE: CCDS.L - news) which identified early signs that a mortgage lending clampdown that took effect at the end of April was having an impact.
The Mortgage Market Review (MMR) - brought in to ensure customers can afford repayments - force loan applicants to undergo interviews lasting hours during which their finances are carefully scrutinised.
Rics said it expected UK house prices to increase by 3.6% over the next 12 months - its most modest prediction since last December.
Simon Rubinsohn, its chief economist, said: "What we are really seeing is some of the very strong upward momentum starting to come off the housing market, as a lack of supply, higher prices, more prudent lending measures and some of the talk from the Bank of England are creating a level of caution among sellers and buyers.
"The most visible indicators of this are the revised downwards price expectations for the next 12 months and the flatter picture regarding new buyer enquiries.
"In particular, we're seeing the London market level off".
The Rics report followed a warning by the International Monetary Fund that steep house price growth and risky lending pose a threat to the UK's economic recovery .
The Chancellor George Osborne responded by insisting the Bank of England's financial policy committee had the tools it needed to take risk out of the system.
The Business Secretary Vince Cable went further in comments on Thursday, saying he favoured a cap on mortgages as low as three-times annual salary.
He told BBC Radio 4's Today programme that banks should not "throw petrol on the fire".
Mr Cable said: "Most of us who have been through various housing booms in the past have recognised that a kind of stable level is three or three-and-a-half times".
He was speaking as the Council of Mortgage Lenders revealed figures showing that first-time buyers were typically borrowing 3.42 times their gross income in April - with the average mortgage reaching a record £121,500 in the month.
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