By Scott Kanowsky
Investing.com -- Shares in British homebuilders sank on Thursday, following fresh data that suggested a downturn may be looming for the U.K. housing market.
Annual growth of house prices in Britain fell slightly to 10.7% in June, from 11.2% in the previous month, according to figures from mortgage provider Nationwide. On a monthly basis, prices increased for eleventh month in a row, up by 0.3%.
The average price of a U.K. home also climbed to a new record high of £271,613.
In a statement, Nationwide chief economist Robert Gardner said the housing market has retained a "surprising" amount of resiliency as consumers face soaring inflation. But he warned that mortgage data may signal a potential slump.
“There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer enquiries," Gardner said.
U.K. homebuilding companies Barratt Developments (LON:BDEV), Persimmon (LON:PSN), Kingfisher (LON:KGF), and Melrose Industries PLC (LON:MRON) all saw their shares decline toward the bottom of the pan-European STOXX 600, following the release of the Nationwide numbers.
Gardner added that the housing market is expected to slow further as rising prices take their toll on household spending in the coming quarters. Inflation is predicted to touch double-digits later this year, according to a Bank of England forecast earlier this month.
He also flagged that efforts by the BoE to address the spike in inflation - which may include aggressive interest rate hikes - "will also exert a cooling impact on the market if this feeds through to mortgage rates."