By Suban Abdulla
LONDON, May 8 (Reuters) - British house prices fell in April for a second month in a row as concerns about the impact of the war in Iran hurt buyer demand and in annual terms they rose by the least since December, figures from mortgage lender Halifax showed on Friday.
Halifax's measure of house prices dipped by 0.1% after dropping by a monthly 0.5% in March, and were just 0.4% higher than in April last year, slowing from March's 0.8% rise in annual terms.
The median forecast in a Reuters
poll of economists had pointed to a monthly house price fall of 0.1% in April and an annual rise of 0.6%.
"After a strong start to the year, recent global developments have added a greater degree of uncertainty to the outlook," said Amanda Bryden, head of mortgages at Halifax.
"In particular, higher energy prices have fed into inflation expectations, prompting markets to reassess the path for interest rates – a shift that has already pushed up borrowing costs for many buyers."
The Bank of England kept borrowing costs at 3.75% last week but stressed the risk of higher inflation because of the war.
Investors on Friday were fully pricing in two quarter-point increases in rates by the end of 2026 with a slight chance of a third.
Early results from local elections showed the Labour Party suffered heavy losses and could potentially lead to an internal party challenge to Starmer, raising questions about future government borrowing.
Ashley Webb, senior UK economist at Capital Economics, said borrowing costs could rise further and suppress house price growth if Starmer were to resign.
Some other measures of Britain's property sector have also suggested weaker demand due to headwinds from the Iran war.
Figures from S&P Global on Thursday showed the downturn in Britain's construction sector intensified, partly due to a sharp drop in house-building, while the Royal Institution of Chartered Surveyors reported the most widespread fall in new buyer demand since August 2023 in March.
However, another mortgage lender Nationwide last week said house prices rose by 0.4% in April, taking annual house price inflation to 3.0%.
(Reporting by Suban AbdullaEditing by William Schomberg)
