UK house prices slide for a second month as high values stifle demand

UK house-prices fell for a second month in August, as high prices curbed demand and sales activity softened, Halifax said.

Prices slipped 0.2 per cent, after dropping 1.1 per cent in July, the mortgage lender said on Wednesday. In the three months through August, values grew 0.7 per cent, the slowest quarterly pace since December 2014. From a year earlier, values increased 4.1 per cent to an average £213,930 (Dh1.05 billion) , while the three-month annual rate of growth slowed to the least since 2013.

While Halifax did not mention whether Britain’s vote to leave the European Union was a factor in the August decline, last month it said it was too early to tell what the effect would be. The most recent data from the Bank of England showed mortgage approvals slowed in July and the central bank has said both housing transactions and house-price inflation “may decline further.”

“House-price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase,” said Martin Ellis, an economist at Halifax. “There are also signs of a softening in sales activity.”

House-price gains outpacing earnings is expected to constrain demand, curbing price growth, he said.

“Housing-market activity is likely to be limited over the coming months and prices will be increasingly pressurized as mounting uncertainty affects the economy and also constrains consumer confidence and willingness to engage in major transactions,” said Howard Archer, the chief European economist at IHS Global Insight in London. “We suspect that business and consumer uncertainty will heighten in 2017 once the UK formally launches divorce proceedings from the EU.”

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