5 housing stocks to explore as buyers' demand declines by 44%

The disastrous mini-budget's aftermath still haunts the United Kingdom's property market. Even though new PM Rishi Sunak has managed to bring some stability to the market, the property market continues to suffer.

According to a survey by real estate group Zoopla, the UK's property market activity stalled in October. The house price growth in the UK has dropped to its lowest quarterly level since February 2020. Meanwhile, the UK house price inflation has depreciated to 7.8% -- its lowest growth rate recorded since November 2021.

The mini-budget proposal, which former prime minister Liz Truss put forward and chancellor Kwasi Kwarteng, had caused chaos in the mortgage market. As a result, the sending rates increased by a percentage point, forcing lenders to pull products. As a result, first-time home buyers are not turning to rental homes, putting their purchases on hold. According to the property website Rightmove, the demand for rental properties rose by 23% compared to October 2021.

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As a result, now sellers around the UK are already offering discounts on asking prices. Almost a quarter of homes for sale have witnessed reduced asking rates, with predictions that the number of transactions will likely fall from 1.3 million to 1 million by next year. The buyers' demand dropped by 44% year-on-year in October. The sales volume also took a hit as it decreased by 28% compared to a year earlier. However, according to Zoopla, these figures were still on par with the pre-pandemic period.

The real estate group is further predicting that the price growth will likely dip into negative territory in 2023 due to a weaker economic outlook. According to the report, as many as 10 homes had already witnessed price depreciation of over 5% since September. Most areas that slashed rates to attract buyers were from the South-East and East of England.

Amid this, Kalkine Media® explores how are the housing stocks faring in the market.

Persimmon plc (LON: PSN)

The housebuilding company Persimmon plc is a constituent of the FTSE 100 index. With a market cap of £ 4,242.20 million, the PSN shares were trading and witnessed a weak opening as it was down by -2.11% at GBX 1,300.50 as of 8:36 am GMT on Monday. Persimmon hasn't been faring well, and thus its returns on both a one-year and year-to-date basis have been on a negative trend at -52.23% and -54.39%, respectively, as of 28 November 2022. The REIT has a turnover (on book) of £1,099,912.78, along with an EPS of 2.47.

Taylor Wimpey Plc (LON: TW)

With a market cap of £3,673.26 million, Taylor Wimpey plc's shares were trading at GBX 104.00 at 8:39 am GMT. Taylor Wimpey, which builds homes in the UK, North America, Spain and Gibraltar, too, has not been faring well on a one-year and a YTD basis as it is down by -32.46% and -40.66%, respectively. The turnover (on book) of the REIT stands at £316,161.11, along with a EPS of 0.06.

Grainger Plc (LON: GRI)

One of the UK's largest residential landlords, boasting over 9000 homes across the country, Grainger Plc, as of 8:39 am GMT on Monday, was trading at GBX 244.80, down nearly 1.4%. According to the earning results, Grainger reported sales of £86.3 million compared to £70.6 million a year ago. With a market cap of £ 1,814.98 million, GRI posted negative returns on a year and YTD basis at -21.21% and -22.41%, respectively.

Capital & Regional plc (LON: CAL)

Capital & Regional plc's year-to-date return stands at -4.61% as of 28 November. Its one-year returns, too, were in the negative category at -5.23%. CAL shares on Monday were trading at GBX 58.00, down by -1.17% at around 8:52 am GMT. The FTSE All-Share constituent had a market cap of 98.13 million with an EPS of -0.22.

Barratt Developments plc (LON: BDEV)

The FTSE 100 listed Barratt Developments plc primarily focuses on the acquisition and development of land. The BDEV shares on 28 November were down by -0.69% and were trading at GBX 404.70. With its three consumer brands, Barratt Homes, David Wilson and Barratt London, BDEV had a market cap of £4,085.52 million and posted both negative one-year and YTD returns of -41.18% and -46.24%, respectively.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.