21st Aug 2023 15:30
(Alliance News) - Less-than-stellar data from Rightmove put housebuilding shares on the backfoot on Monday.
On Monday afternoon, in the FTSE 100, housebuilding stocks were down. Taylor Wimpey PLC, Persimmon PLC, Barratt Developments PLC and Berkeley Group Holdings PLC fell 4.6%, 3.7%, 2.7% and 3.2%, respectively.
UK house prices declined at the fastest pace for the month of August since 2018, according to numbers from Rightmove on Monday.
The property portal's latest findings showed house prices fell 1.9% on-month to GBP364,895 in August. It is the chunkiest August price fall since 2018. Prices had declined by 0.2% in July from June.
On an annual basis, prices fell 0.1% in August, the first year-on-year decline in house prices since 2019.
The number of sales agreed is now 15% lower than the more normal 2019 level, Rightmove noted, in a sign of "affordability challenges".
AJ Bell's Russ Mould said the data "is hardly a surprise".
Rightmove noted that would-be buyers were "preoccupied by holidays, inflation, and the highest base rate since 2008", Rightmove said. The Bank of England earlier in August lifted bank rate by 25 basis points to 5.25%.
"Sellers might be reducing their prices but it's still not enough of a lure, given how unaffordable houses have become. The number of deals shaken on in August have been 15% lower than the same month in 2019," said Hargreaves Lansdown's Susannah Streeter.
Looking ahead, Davy said that the data also suggests that UK house prices will see "further falls" in the second half of 2023. Davy's current consensus forecast is that house prices will fall 5% through 2023.
Mould added that Crest Nicholson's profit warning on Monday "has laid bare the scale of the impact of a housing slowdown on the housebuilding sector".
Crest Nicholson Holdings PLC was down 11%.
Crest Nicholson lowered profit guidance after warning that conditions in the housing market worsened over the course of the summer. It said it does not expect conditions to improve before the Surrey-based housebuilder's financial year-end on October 31.
The company now expects to achieve annual adjusted pretax profit of GBP50.0 million, which would represent a 64% decline from the GBP137.8 million achieved in the prior year. It had previously expected a profit outcome of GBP73.7 million, the company said in June, which would have been in line with published consensus at the time.
"Against a backdrop of persistently high inflation and rising interest rates, trading conditions for the housing market have worsened during the summer of this year. While pricing has remained resilient in a market with limited supply and few distressed sellers, the economic uncertainty is deterring prospective home movers," Crest Nicholson cautioned.
By Sophie Rose, Alliance News reporter
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Crest NicholsonTaylor WimpeyPersimmonBarratt DevelopmentsBerkeley Group