UK house price inflation accelerates in September, house builder stocks rise

UK house price growth accelerated in September according to data fro high street lender Halifax, Friday. House builder stocks rose.

UK house price inflation accelerates in September, house builder stocks rise

The latest house price report from UK high street lender Halifax showed a healthier UK housing market than other recent surveys indicate. The monthly index calculates annual house price inflation accelerated to the fastest pace since February.

The Halifax house price index shows the average price of a UK property rose 0.8% on the month in September and by 4% on the year. That compares with the August gains of 1.5% on the month and 2.6% on the year.

“UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment,” said Halifax community Bank managing director, Russell Galley.

“However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand,” Galley added.

UK house builder stocks moved higher in Friday trading. Close to midday, Bellway, Barratt Developments and Redrow were all in the green.

The data are in contrast to other surveys detailing a continued slowdown in annual house price inflation at the beginning of the autumn. According to UK lender Nationwide, the rate of annual price inflation slowed to 2% in September, from 2.1% in August.

Halifax’s Galley also mentioned the prospect of a Bank of England (BOE) interest rate hike in the report. However, he said: “We do not anticipate this will have a significant effect on transaction volumes”.

But, if rates rise, mortgage interest rates will likely follow suit. Meanwhile, earnings growth remains below the pace of price inflation, meaning UK consumers will continue to be squeezed by the pace of price rises for everyday goods.

Even if this doesn’t have an immediate impact on property purchase volumes, it has the potential to weigh on economic growth, as it could quench Briton’s appetite to spend. Consumer spending provides a significant boost to the UK’s economic output. 

As of 11:42 BST, Friday, 06 October, Redrow plc share price is 370.55p.

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