Shares of U.K. housebuilders had a poor start to the week after one top ten construction group delivered a profit warning and data showed asking prices for homes suffering their sharpest fall since 2018.
London-listed Crest Nicholson
CRST,
saw it stock lose 8% after the builder said it now expected to deliver annual adjusted profit before tax of £50 million, considerably below analyst forecasts of around £73 million.
“While pricing has remained resilient in a market with limited supply and few distressed sellers, the economic uncertainty is deterring prospective home movers,” the group said.
Slower demand reflects surging mortgage costs, which have jumped since the Bank of England began swiftly raising interest rates to combat inflation that remains nearly four times the central bank’s 2% target.
“Sales are deteriorating at a rapid click, which is not surprising given that potential home buyers will be running scared from sky-high mortgages,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Confirming the sectors’ stress was a report from Rightmove, a property portal, which showed asking prices of owners listing their homes fell by 1.9% in August, the biggest retreat for the month in about five years.
“Weak house price data is hardly a surprise. Economic uncertainty is elevated, mortgage costs have gone through the roof and the Help to Buy scheme has come to an end,” said Russ Mould, AJ Bell investment director.
“Crest Nicholson’s profit warning has laid bare the scale of the impact of a housing slowdown on the housebuilding sector,” and “Rightmove’s latest reading on the property market, has had a knock-on effect on share prices in the rest of the sector this morning,” Mould added.
Persimmon
PSN,
Taylor Wimpey
TW,
Berkeley
BKG,
and Barratt Developments
BDEV,
lost between 1.5% and 3% having bounced off session lows.
The pound
GBPUSD,
managed to shrug off concerns about Britain’s housing sector, however, trading little changed on the day at $1.2736.
Meanwhile, European bourses were mostly positive as they tracked an uptick in U.S. futures. The DAX 40
DX:DAX
in Germany rose 0.7%, while strength in luxury goods groups lifted the CAC 40
FR:PX1
in France by 1.2%. Energy groups helped London’s FTSE 100
UK:UKX
gain 0.7% as oil prices
CL.1,
rose.
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