"Natural correction" coming to London housing market, warns Nationwide
The chief executive of Nationwide has warned the housing market in London is likely to see a "natural correction" as rising prices put off buyers.Speaking to the BBC, Graham Beale explained a "slowing down in the marketplace" is occurring and that "at some point buyers just start saying no" to the sharp increase in property prices that has been seen in the capital over recent months.He made the comments as Nationwide reported its best-performing year, with pre-tax annual profits climbing to £677 million from £168 million a year previously.Mr Beale's comments were supported by Ray Boulger of mortgage broker John Charcol, who said the pace at which house prices are rising in the capital is "unsustainable"."There are signs that the London market is topping out," he remarked, adding that over the coming year it is likely the current big difference in prices between property in the capital and elsewhere in the country will "narrow considerably".He noted that prices elsewhere in the UK are way off the peak that was seen in 2007 prior to the economic crisis, but stopped short of predicting of a housing bubble spreading outside the capital, saying it is "very difficult" to talk with a degree of certainty.Deputy director at the Bank of England Jon Cunliffe, however, has raised concerns about the upward trend being seen across the UK housing market. Speaking earlier this month on the back of news that one in 15 homes in London sell for £1 million and up, he said ignoring the momentum would be dangerous, adding there is a risk of a "major overshoot in prices". He stated the Bank of England may need to take action in the months to come if it feels the market needs to be cooled to avoid the risk of another crash.
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