House price growth slows, as construction sector contracts

House price growth eases as households squeezed

Halifax have published their house price index for July, revealing that – as expected – the growth of property values is beginning to soften.

Reporting the first fall in a year, the average house price is now £293,221 – a marginal drop of -0.1% in the month, with annual house price growth easing to 11.8% from 12.5% last month.

House prices are likely to come under more pressure as those market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold. Therefore, a slowing of annual house price inflation still seems like the most likely scenario.

RUSSELL GALLEY, MANAGING DIRECTOR, HALIFAX

Zoopla also revealed similar news, reporting that house prices have risen 8.3% in the past 12 months, bringing the average home price to £256,600.

This is a reduction in annual growth since last month, which reached 9.6%. However, the property website found that prices are continuing to rise faster than the average annual rate over the last five years.

Nationwide’s house price index for July painted a more optimistic picture, reporting that property values have increased by 0.1% in the month, with annual growth reaching 11.0% – up from 10.7% in June.

The mortgage lender stated that the average house was worth £271,209; a slight reduction from June, but without seasonal adjustment.

While there are tentative signs of a slowdown in activity, with a dip in the number of mortgage approvals for house purchases in June, this has yet to feed through to price growth.

ROBERT GARDNER, CHIEF ECONOMIST, NATIONWIDE
Source: Nationwide

Construction sector contracts as inflation hampers growth

The latest S&P Global / CIPS UK Construction Purchasing Managers’ Index (PMI) has revealed that construction growth has contracted for the first time in 18 months.

Slumping to 48.9 in July – below the neutral reading of 50 – the report blamed rising inflation, poor consumer confidence and higher interest rates for the fall in activity.

Meanwhile, Gleeds have revealed that 8 out of 10 UK contractors have seen projects stall as a result of current economic uncertainty.

Writing in their Summer Market Report 2022, the property consultant found that more than a quarter of survey respondents are predicting that tender opportunities will decrease as inflation, political instability and the war in Ukraine drain market confidence.


Housebuilders push back on cladding pledge

Major housebuilders have told the Government they will refuse to sign the contract drawn up to make the £2bn cladding pledge a reality, citing that it is “impossible to sign” in its “current format”.

The Home Builders Federation (HBF) has written to the Department for Levelling Up, Housing and Communities (DLUHC) warning that the pledge – signed up to by 48 developers – goes “well beyond” the commitments agreed last year.


Taylor Wimpey and Lovell’s report half-year profit increases

Taylor Wimpey have reported £334.5m of pre-tax profits for the six months to 3rd July 2022, up 16% from £287.5m in the same period last year.

Reporting her first company results presentation, Chief Executive Jennie Daly revealed that turnover was down 5.4% when compared to last year, but that average selling prices had increased by 3.7% to £337k, primarily due to house price inflation.

Meanwhile, Lovell’s operating profit rose 15% to £13.9m during its half year, compared to the equivalent period in 2021, with the developer reporting “a significant contribution” to parent company Morgan Sindall’s results.

The partnerships housebuilder also reported a 5% increase in turnover to £284m, and an improvement in operating margin to 4.9%.

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