Development Lenders News:- UK house price growth for June remained modest with a year-on-year rise of 0.5 per cent bringing the average price of a home to £216,515.

The Nationwide’s house price index showed a 0.1 per cent month-on-month rise for June with increases in England subdued largely due to poor performance in the South East.

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Nationwide’s chief economist, Robert Gardner, said this was the seventh consecutive month where house price growth remained below 1 per cent.

“Survey data suggests new buyer enquiries and consumer confidence have remained subdued in recent months. Nevertheless, indicators of housing market activity, such as the number of mortgages approved for house purchase, have remained broadly stable.”

He said the housing market was likely to continue mirroring developments in the broader economy.

“While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity, with price growth and transaction levels remaining close to current levels over the coming months.”

The South still returning price falls

London’s outer metropolitan area showed an annual decline in the second quarter, April to June, of 1.8 per cent with a 1.6 percent drop in prices in the outer South East.

The best performing region was Yorkshire and Humberside with a 3 per cent year-on-year rise for the period from April to June.

Northern Ireland was the strongest performing nation for the second quarter, with annual price growth rising to 5.2 per cent, from 3.3 per cent in the previous quarter. Wales also saw a pick up to 4.2 per cent, from 0.9 per cent in the first quarter.

Economic forecasters the EY ITEM Club predict house prices will rise by around 1 per cent over the year due to lack of properties on the market and low interest rates.

Chief economic advisor, Howard Archer, said: “Should the UK leave the EU with a deal at the end of October, we believe reduced uncertainty and modestly improved economic activity could see house prices rise by around 2 per cent over 2020.”

But he predicted an immediate 5 per cent drop in values should the UK leave the EU on October 31st without a deal.

Development Lenders –  HZA

Brokers Hank Zarihs Associates said the current stable market was positive for property development lenders who are still keen to offer construction loans at good rates.

The purchasing managers index for construction activity in June saw a sharp fall to 43.1, compared to 50.5 in April, and well below the 50 no-change mark.

House building fell for the first time with construction companies blaming weak demand and concerns about residential sales.

Tim Moore, associate director  for IHS Markit, which compiles the index, said: “Greater risk aversion has now spread to the residential building sub-sector, as concerns about the near-term demand outlook contributed to a reduction in housing activity for the first time in 17 months.”

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