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UK homebuilder shares tumble on bleak house price forecasts

UK homebuilder shares tumble on bleak house price forecasts
UK homebuilder shares tumble on bleak house price forecasts

Shares of British homebuilders fell to their lowest level in nearly a decade on Friday after HSBC released analysis predicting house prices in London could fall by up to 15%.

Research predicts UK housing demand will fall by 20% from this autumn due to rising mortgage rates and inflation.

HSBC expects average UK house prices to fall by 7.5% outside London, while prices in central London will fall by double. For new homes, research predicts a 5% decline.

The HSBC rating accelerated the decline in shares of the country’s biggest developers, which have already suffered average declines of 40% this year.

Shares of Redrow, Barratt Developments and Berkeley Group fell 4% to 7% in morning trading after the note.

Expectations that UK house prices will start to fall have been growing steadily in recent months as the Bank of England raised interest rates in a bid to combat the sharp rise in the ‘inflation.

Rising borrowing costs have made it harder for buyers to access the market and added to a growing list of problems for listed developers, who have been hit by the withdrawal of major government support measures in recent years. months and the economic downturn.

Since the last financial crisis, homebuilders have enjoyed near-uninterrupted earnings growth and strong stock prices.

The sector even remained resilient during the pandemic, recovering strongly from a correction when the market closed in early 2020. By later that year, demand had recovered to new highs.

But after a long period of growth, buoyed by low interest rates and government support, the market is showing signs of slowing down.

HSBC analysts now expect earnings before interest and tax for Britain’s largest listed builders to fall 32% to 53% – averaging 43% – by 2023-24 compared to 2022 .

Rob Perrins, chief executive of London-based developer Berkeley, said there were “difficult times ahead”, but added the bank was far too pessimistic about the market, particularly in the capital.

“I think we will have some choppy times, but to say demand is going to drop by that amount is wrong,” he said.

. stock builders homes UK tumble on dark forecast price real estate

. homebuilder shares tumble bleak house price forecasts

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