U.K. House Prices Decline for Second Month as Sales Soften

Updated on
  • Halifax says quarterly growth is slowest since Dec. 2014
  • Report published in London doesn’t mention Brexit-vote effect

Is Brexit Behind the Fall in U.K. House Prices?

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

Prices slipped 0.2 percent, after dropping 1.1 percent in July, the mortgage lender said in a statement on Wednesday. In the three months through August, values grew 0.7 percent, the slowest quarterly pace since December 2014. From a year earlier, values increased 4.1 percent to an average 213,930 pounds ($286,923), while the three-month annual rate of growth slowed to the least since 2013.

While Halifax didn’t 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, chief European economist at IHS Global Insight in London. “We suspect that business and consumer uncertainty will heighten in 2017 once the U.K. formally launches divorce proceedings from the EU.”

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(Updates with economist comment in sixth paragraph.)
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