money 2724248 960 720 1
Marketing No Comments

British house prices fell unexpectedly last month as inflation continued to squeeze household budgets, dragging annual house price growth down to one of its weakest rates in years, figures from major mortgage lender Halifax showed on Wednesday.

Average house prices fell 0.6 percent in January after a 0.8 percent decline in December, Halifax said, well below a consensus forecast of a 0.2 percent rise in a Reuters poll of economists and the first time prices have fallen for two months in a row since just after June 2016’s Brexit referendum.

British annual house price growth has slowed since the vote to leave the European Union, though the impact has been concentrated in London and neighbouring areas, with most other parts of the country relatively little affected.

House prices in the three months to January were 2.2 percent higher than the same time a year earlier, down from 2.7 percent in December and the weakest increase since July, when prices rose at the slowest pace since April 2013.

Howard Archer, an economist at consultants EY Item Club, predicted house prices would rise by two percent this year, as high inflation and Brexit uncertainty kept a lid on prices.

“Housing market activity is expected to remain lacklustre as the marked squeeze on consumer purchasing power only gradually eases, confidence is fragile and appreciable caution persists over engaging in major transactions,” he said.

British consumer price inflation hit its highest rate in more than five years in November, and the Bank of England raised borrowing costs for the first time in more than a decade.

November also saw Chancellor Philip Hammond scrap a tax on house purchases for almost all first-time buyers. Halifax said it was too early to see any impact from the change.

Archer said a shortage of housing made outright year-on-year price falls unlikely.

The Halifax data contrast with figures published last week by rival lender Nationwide which showed a surprise pick-up in growth to 3.2 percent in January, the biggest rise since March 2017.

Nonetheless, the figures would make the BoE’s Monetary Policy Committee reluctant to signal a rapid pace of further interest rate rises when it publishes its next rate decision on Thursday, Samuel Tombs of Pantheon Macroeconomics said.

“The MPC … can’t ignore the evidence of a housing market slowdown now in front of them, so we doubt that they will signal to markets tomorrow that interest rates could rise as soon as May,” he said.

Source: UK Reuters

Leave a Reply

Your email address will not be published. Required fields are marked *