As property prices in London begin to slow the share price of the capitals best known estate agents falls following a profit warning.
The Council of Mortgage Lenders (CML) released data showing gross mortgage lending in the UK was at £17.8 billion in September, down 1% compared to August but still 10% above the figures this time last year.
Homebuyers have been cautious about the London market after property prices increased over 20% in the last year.
As a result Foxtons sales have reduced 7.8% in the third quarter to £16.4 million. The reduction in earnings has impacted the share price falling 20% to 165p.
Uncertainty in property market
Foxtons blamed the slowdown in the London property market on political and economic uncertainty within the UK and Europe.
Tighter regulation introduced by the mortgage market review (MMR) for lending has also hindered the market as well as a divergence in price expectations between buyers and sellers.
The CML has said a weaker UK economy has seen a delay in the rise of interest rates from the all time low of 0.5%. There is growing evidence that both the property market and mortgage lending to first time buyers, home movers and remortgage buyers is on a plateau.
Mortgage activity is lower
The British Bankers’ Association (BBA) has said there has been a 10% fall in mortgage approvals for house purchases over the last year to 39,271 in September.
The reduced supply of affordable properties for home movers has resulted in a greater number of remortgage buyers remaining in their existing home and saving for a bigger deposit.
Mortgage approvals, which show in the data when a mortgage is granted at the final stage of the house buying process, started the year at a high level but have since slowed are likely to have an impact on property prices.
The number of remortgage buyers is also lower by 24% year on year to September and the level of mortgage approvals is only half what it was in 2006.
In contrast for older homeowners there is higher activity with equity release mortgage buyers able to access money in their property to repay an interest only mortgage, pay for care at home or even buy a more expensive home.
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