Nationwide: London house price boom may be coming to an end

 

The boom in London house prices may be coming to an end, the boss of Britain’s biggest building society warned on Wednesday.

Graham Beale, the chief executive of Nationwide, said he believed there were signs of “natural moderation” coming through in the capital’s housing market.

His comments came as new  data from the Council of Mortgage Lenders showed a dip in lending to first-time buyers in London, who are now typically borrowing 3.83 times their gross incomes and taking out loans of £200,000, nearly twice the UK average of £118,750.

Mr Beale said some buyers were already walking away from deals they felt were overpriced. “There’s a point at which  people say no,” he added.

The Governor of the Bank of England recently warned that the property market posed the biggest threat to recovery and many commentators expect the Bank will act as soon as next month to curb lending.

The Nationwide’s figures for March showed prices across the country 10 per cent higher than a year ago and, despite a quarter-on-quarter fall, the CML data reveals lending in London, Scotland and Wales between January and March was 30 per cent higher than at the start of 2013.

However, Mr Beale believes the Bank and Treasury should hold off taking any measures to calm the housing market. “I’m a fan of allowing the market to run through its usual season and see where we are in September and October,” he said. “Any sort of intervention, if it is needed, should be directed towards London activity and not across the whole country.”

Read more
Fallout from a bursting of London’s housing bubble would lap up to No 10  

His caution was echoed by Paul Smee, the CML’s director-general, who said: “We are increasingly looking at not one overall UK housing market, but many smaller regional markets with different characteristics, and Greater London has particular challenges. Affordability remains a crucial factor and policymakers need to be aware that any measures they implement may have different effects in different locations.”

According to the CML figures, lending to first-time buyers also slowed in Scotland and Wales in the first quarter compared with the end of 2013. But affordability outside London is less of an issue, with first-time borrowers in the two countries taking out average loans of £89,975 and £98,000 respectively, equivalent to 2.98 and 3.2 per cent times income.

Mr Beale was speaking as Nationwide announced a doubling of its annual underlying profits to £924m.

Gross mortgage lending rose by 31 per cent to £28.1m, giving the society a 14.9 per cent share of the market, which is well above its long-term trend of 10-11 per cent. In the first-time buyer market, Nationwide saw a 37 per cent rise in loans and took a 20 per cent share of the market.

Savings rose by £4.9bn to £130bn with the new Loyalty Saver accounts attracting £9.2bn. However, Mr Beale warned that the Chancellor’s plans for new pensioner bonds could hit banks and building societies’ savings products next year.

“The kind of rates which are being suggested are way outside the normal competitive range,” he said. “I am sympathetic to what is being done by the Chancellor, but we simply cannot compete.”

George Osborne announced the new pensioner bonds from National Savings & Investments allowing over-65s to invest up to £10,000 in one year or three year savings bonds. The rates will be announced in this year’s Autumn Statement but early estimates are 2.8 per cent for a one-year bond and 4 per cent for a three-year one.

Mr Beale said that he thought that the outflows of savings into pensioner bonds could well be matched by inflows into new cash Isas where he welcomed the Chancellor’s decision to raise the limits.

Having raised an extra £550m in new capital in March, Nationwide has passed the Prudential Regulation Authority’s leverage ratio of 3 per cent well before the December 2015 deadline.

News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
PROMOTED VIDEO
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Sport
Colombia's James Rodriguez celebrates one of his goals during the FIFA World Cup 2014 round of 16 match between Colombia and Uruguay at the Estadio do Maracana in Rio de Janeiro, Brazil
sportColombian World Cup star completes £63m move to Spain
Arts and Entertainment
booksThe best children's books for this summer
Life and Style
News to me: family events were recorded in the personal columns
techFamily events used to be marked in the personal columns. But now Facebook has usurped that
News
news
News
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Travel
Fair trade: the idea of honesty boxes relies on people paying their way
travelIt seems fraught with financial risk, but the policy has its benefits
News
people
Sport
Antoine Griezmann has started two of France’s four games so far
sport
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary