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Figures show the housing market may be cooling

Signs are emerging that the UK's property market could be beginning to cool, despite the continued shortage of supply.The Royal Institution of Chartered Surveyors' (RICS) latest residential market survey shows that more stringent lending conditions have led to a levelling off of new buyer demand, as well as fewer properties coming onto the market.May witnessed the fifth successive month in which the national supply of new homes coming onto the market declined. There were also signs the London market may be beginning to moderate, as demand for new homes fell for the first time since June 2012. Banks are now lending less, with the average Loan to Value ratios among first time buyers dropping to 85.3 per cent (from 86 per cent in April).A fall in the expectations for house price rises over the next 12 months also occurred - respondents now expect them to rise 3.6 per cent rather than 3.9 per cent.There are signs that tighter access to finance and concerns over supply are affecting activity outside the capital, with surveyors in the south-east and south-west expecting less market activity.RICS chief economist Simon Rubinsohn said: "What we are really seeing is some of the very strong upward momentum starting to come off the housing market, as a lack of supply, higher prices, more prudent lending measures and some of the talk from the Bank of England are creating a level of caution among sellers and buyers.""In particular, we're seeing the London market level off," he added.A modest pick-up of demand was seen in the rental sector as a consequence of the more stringent lending conditions. Rent prices are now expected to grow at around 2.5 per cent over the next twelve months and at an average annual rate of four per cent over the next five years. Nationwide's latest house price index also suggested the property market may be starting to cool, as it revealed mortgage approvals in May were around 17 per cent below April's figure. 

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