First signs emerge of slowdown in housing market

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The Independent Online

The first firm evidence of a slowdown in the housing market in the wake of the terror attacks emerged yesterday as new figures showed parts of London had ground to a halt.

Meanwhile, a separate survey revealed the number of new mortgage applications had fallen sharply before the attacks in the US which demolished the World Trade Centre and damaged the Pentagon.

A quarter of the capital's boroughs saw no increases in house prices during September, according to Hometrack, a property website. This is the first survey since the attacks.

Hometrack said house prices in the capital had started to "wobble". John Wriglesworth, its housing economist, said: "There is no doubt house price rises are slowing across London."

Hammersmith and Fulham suffered a 0.3 per cent fall while Lewisham, Kingston, Richmond, Barking, Harrow and Merton were at a standstill.

A poll of more than 900 London estate agents found that prices rose by 0.3 per cent to take the rise since the start of the year to 7.7 per cent.

The monthly rise compared with a surge of 1.5 per cent in August across the UK, according to the UK's largest mortgage lender Halifax.

Halifax and Nationwide building society will publish national and regional figures for July to September next week, which will be scanned for signs of a slowdown.

Hometrack said there had been a "dramatic" fall in sales activity in the immediate aftermath of the terror attacks.

"The World Trade disaster has sent a shudder through the market, with agents reporting a strong drop in buying enquiries," Mr Wriglesworth said.

However, he said with unemployment at a 26-year low and mortgage costs at their lowest levels for more than 40 years, the housing market was still fundamentally positive.

"The prospect of war in Afghanistan does not stop people desiring to own their own homes," he said.

Meanwhile, the British Bankers' Association, which represents most high street lenders, said the number of mortgage applications fell by 7,748 or 8 per cent between July and August.

The amount loaned for house purchase, rather than remortgaging or equity withdrawal, fell 10 per cent and the average loan size dipped by £1,400.

Ian Mullen, chief executive of the BBA, said demand for homes usually weakened in August. "So it is probably too soon to gauge whether market sentiment is falling further than the seasonal picture," he said.

Adam Cole, an economist at HSBC, saidmortgage approvals usually fell by up to 15,000 in August. "In underlying terms, these data represent a further substantial strengthening of loan approvals," he said. He said the data suggested house price inflation was set to hit 15 per cent.

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