London home prices lose steam

PUBLISHED : Wednesday, 28 January, 2015, 6:00am
UPDATED : Wednesday, 28 January, 2015, 6:00am

Gains in London's home values slowed to an annualised rate of about 5 per cent in the fourth quarter as high prices and curbs on mortgage lending cooled the market, Hometrack said.

Prices in the British capital climbed 14.7 per cent in December from a year earlier, the research company said. Home price growth in the country, which was 8.3 per cent during the period, had plateaued and would slow this year, it said.

Bank of England governor Mark Carney in June placed restrictions on mortgage lending to cool the market.

The slowdown had been more pronounced in London, where prices had climbed 55 per cent in five years, Hometrack said.

"After the strength of the recovery, a period of lower growth looks inevitable," research director Richard Donnell said.

Demand for mortgages fell the most since 2008 in the fourth quarter amid more stringent lending criteria, the Bank of England said.