Housebuilders lower as house prices remain flat

Nationwide said prices were unchanged from May, against expectations for a 0.1 per cent rise

Housebuilders were mostly lower on Wednesday after UK house prices remained flat in June, according to data from Nationwide, undershooting expectations for a small monthly rise.

Nationwide said prices were unchanged from May, against expectations for a 0.1 per cent rise. Annual growth improved to 2.2 per cent, from 1.7 per cent in May.

The figures suggest the housing market has lost some momentum after higher energy prices and market interest rates hit confidence.

Robert Gardner, Nationwide’s chief economist, said: It is not surprising that the market has softened a little in recent months, given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates.

He said consumer confidence and housing sentiment had weakened, while mortgage approvals fell noticeably in May.

The South East outside London was the weakest region, with annual growth of just 0.1 per cent.

Gardner said lower oil prices and softer inflation could reduce pressure on the Bank of England to raise interest rates. That could help bring down fixed-rate mortgage pricing and ease affordability pressure.

If maintained, these trends will help to restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters, providing that domestic political uncertainty does not adversely impact sentiment, he said.

Shares in Berkeley Group Holdings PLC dropped 1.8 per cent, Barratt Redrow PLC shed 1.2 per cent and Taylor Wimpey PLC was down 0.5 per cent. Housebuilders were also under pressure on Tuesday and Wednesday from rising bond yields.