Housebuilder shares rise on ‘surprise’ house price spike

Shares in housebuilders rose this morning after the Nationwide reported an unexpected spike in house price in August.

The data, which comes after multiple surveys appearing to show gently flattening housing market activity, saw the value of listed housebuilders rise by as much as 1.3% as the stock market rebounded on the news.

The Nationwide said the average price of a house grew by 2.1% in August, after falling back by 0.6% in July in the wake of the end of the stamp duty holiday.

The mortgage lender said the 2.1% rise was the second largest monthly increase seen in the last 15 years, and put annual house price inflation up to 11%, albeit still below the peak of over 13% seen in June.

Robert Gardner, Nationwide’s chief economist, said the bounce back was “surprising” given expectations that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market, and said the outlook remained “clouded”.

He said the strength of the market in August might reflect strong demand from those buying a property priced between £125,000 and £250,000 who are looking to take advantage of the stamp duty relief that remains in place for those properties until the end of September. He said: “Lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books.”

The numbers come a day after the Bank of England reported a huge drop off in agreed mortgages in the month of July in the wake of ending of part of the stamp duty relief in place since the summer of last year. The Bank also said that applications for new mortgages had fallen sharply.

Shares in Vistry rose 1.3% in early trading, with Barratt, Berkeley, Taylor Wimpey and Persimmon also up by more than 1% prior to 10AM, before falling back slightly.