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.

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Fans hold up a scarf at West Ham vs Liverpool
footballAfter Arsenal's clear victory, focus turns to West Ham vs Liverpool
New Articles
i100... she's just started school
ebooksAn unforgettable anthology of contemporary reportage
New Articles
Life and Style
Couples have been having sex less in 2014, according to a new survey
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... despite rising prices
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam