UK house price inflation slows sharply, housebuilder shares fall

UK house price inflation in 2017 slowed sharply from 2016, two prominent house price indexes have shown. UK housebuilder shares are trading lower, early Monday. According to UK high street mortgage lenders Halifax and Nationwide, the average pace of UK house price inflation in 2017, was the slowest since 2012.

UK house price inflation slows sharply, housebuilder shares fall

UK house price inflation in 2017 slowed sharply from 2016, two prominent house price indexes have shown. UK housebuilder shares are trading lower, early Monday.

According to UK high street mortgage lenders Halifax and Nationwide, the average pace of UK house price inflation in 2017, was the slowest since 2012.

By 1045 BST, Redrow shares were 1.13% lower at £657.00, Barratt Development shares were 1% in the red at £651.20, while Bellway shares had declined 0.81% to £3656.00.

They are among the UK’s three biggest home builders and when house price growth slows or turns negative, it limits their ability to charge higher prices for the homes they build.

House price details

The monthly house price index from Halifax was released earlier Monday and showed the average UK house price fell 0.6% on the month in December, to £225,021. Compared with December 2016, the average house price was 2.7% higher.

While that pace of house price inflation for 2017 was in line with Halifax’s forecast of between 2-4%, it’s a sharp slowdown from the 6.5% gain recorded in December 2016. It’s also the slowest rate at which UK house prices have grown over a calendar year, since 2012.

“As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year,” said Russell Galley, Managing Director of Halifax Community Bank.

“House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat. This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy,” Galley added.

The Halifax expects the UK house price inflation to be between 0-3% in 2018.

London weighs on house price inflation

In a separate release last week, lender Nationwide reported its December house price index. The lender said house prices rose 0.6% on the month and were 2.6% higher in December compared with the same month a year earlier.

Again, that was a slowdown from a 4.5% gain in December 2016 and the smallest annual house price increase since 2012.

Nationwide said a notable slowdown in London property prices weighed heavily on the index. It added it anticipates the average UK house price will rise around 1% in 2018.

As of 11:04 GMT, Monday, 08 January, Barratt Developments Plc share price is 493.15p.

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