Housebuilders feel the pinch after host of data suggests price slowdown

SHARES in FTSE 100 house building companies tumbled yesterday after a flurry of damaging reports on the outlook for the housing market has shattered investor confidence.

As interest rates rise and borrowing rates become more expensive, investors are shying away from pumping their funds into the residential market after figures from the Bank of England show that mortgage approvals for house purchases plummeted to the lowest level since the 2008 financial crash.

Yesterday, Persimmon shares fell by just shy of 10 per cent, while Barratt and Taylor Wimpey were also both firmly in the red.

The number of mortgage approvals decreased to 39,600 in January from 40,500 in December, marking the fifth consecutive monthly decrease in mortgage approvals. In January 2009, the figure stood at 32,400.

Earlier this week, Nationwide’s House Price Index also revealed that properties dropped in value by

1.1 per cent year-on-year in February – pushing investor confidence down even further.

In a further sign of pressures on the market, selling platform Zoopla said more than four in ten properties had seen asking prices knocked down by sellers to attract buyers.