London House Prices Extend Decline as Demand for Property Wanes

(Bloomberg) -- London house prices extended their decline last month amid slumping demand in the capital, according to the Royal Institution of Chartered Surveyors.

For a sixth month, significantly more real estate agents reported falling prices than rising ones, albeit at a slightly slower pace than previously, RICS said is a report Thursday. On a national level prices remained broadly flat, the firm said.

British house-prices are weakening after a three-decade boom pushed them to levels that are unaffordable for most. Slower economic growth and the decision to leave the European Union have further dented demand for homes, especially in London.

The number of people looking to buy an apartment in London was little changed last month, and respondents to the RICS survey expect the subdued interest to persist in the second half of the year. Nationally, the number of sales declined for a 16th month.

“It’s hard to see what is going to provide much impetus for activity in the housing market in the near term,” said Simon Rubinsohn, chief economist at RICS.

Changes to tax rules may have had unintended consequences for the private rented sector, Rubinsohn said. “While it is understandable that the government wanted to provide a lift for first time buyers, this may well come at the cost of higher rents as the appeal of buy-to-let diminishes.”

To contact the reporter on this story: Elizabeth Burden in London at eburden6@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint, David Goodman

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