Builders are shaken as house prices disappoint

MORE than £500m was wiped off the value of Britain’s top builders as figures showed house prices had started to fall before the virus lockdown.

Shares sank after data was released by the Office for National Statistics (ONS) and the Land Registry, revealing that house prices went into reverse in April.

In an ominous warning, the ONS said the figures reflected agreements that were struck before the Government announced lockdown. This is because it typically takes six to eight weeks to complete a purchase, it explained.

The UK house price index showed prices dipped by 0.2pc from March to April, compared with a rise of 0.7pc the same time last year. Prices still increased annually – by 2.6pc to an average of £234,612, however this was also a slower rate of growth than March’s yearly rise of 3.5pc.

Experts are now keenly awaiting figures from May to see the scale of the damage caused by a government freeze on the housing market, put in place at the end of March. The market was reopened in mid-May and Chancellor Rishi Sunak announced a cut to stamp duty in July, to revitalise sales.

Since then, many housing firms have reported surging demand and say prices remain robust for the time being.

But Laura Suter, personal finance expert at AJ Bell, warned that the stamp duty holiday could spark a rush of people trying to move house and if there is a spike in job losses she said it would paint ‘a fairly bleak picture for house prices in 2021’.

Shares in many of Britain’s biggest housing firms fell. Barratt was down 2.2pc, or 11.8p, to 522.6p, and Persimmon dropped 2.5pc, or 70p, to 2752p. Bellway fell by 1.6pc, or 40p, to 2455p. Bovis Homes owner Vistry Group dipped 2pc, or 13p, to 628p, Redrow fell 3.1pc, or 14.2p, to 450p and Countryside slid 2.8pc, or 9p, to 315.6p.

The downward pressure was of little help to the FTSE 100 as it climbed only 0.6pc, or 35.36 points, to 6111.98 despite news of US stocks reaching record highs in early trading.

And the rallying pound was also seen as bad for many of the index’s multinational members, making it more expensive for them to repatriate foreign earnings.

Sterling has effectively erased its losses against the US dollar for the year – hitting a high of $1.3267 – as uncertainty over November’s US presidential election grows.

There was some upwards momentum though, with grocer

Morrisons rising 1.2pc, or 2.3p, to 198.5p after it struck a deal to make its goods more easily available on Amazon’s website.

Primark owner Associated British

Foods was up 1.9pc, or 37p, to 2009p after an upgrade to ‘outperform’ from broker RBC. And packaging company DS Smith rose 2.9pc, or 8.1p, to 284.3p.

But the FTSE 250 slipped into the red, dipping 0.2pc, or 39.63 points, to 17,583.39.

It was led by top fallers including lab equipment maker Oxford

Instruments, which was down 2.8pc, or 42p, to 1458p, and transport provider National Express, which fell 4.3pc, or 6.1p, to 135.5p after news that boss Dean Finch would depart on August 31 for Persimmon, where he will take over as chief executive.

However, in good news for savers, IT equipment provider Softcat was up 0.2pc, or 3p, to 1332p after it announced it was planning to resume paying a dividend because profits were slightly ahead of its expectations.

Engineer Avon Rubber rose 7.1pc, to 245p, to 3675p after being awarded a ten-year contract by western defence alliance Nato to supply masks, air systems, filters, spare parts and accessories.