BCPT, AEWU, ESP: Stocks to explore as the housing bubble is set to burst

Highlights

• The UK’s housing market, which has been booming over the past two years, is headed for a slowdown, as per various studies.
• From 14.3% in March and 12.1% in April, the yearly growth rate of house prices has dipped to 11.2% in May, as per the Nationwide Building Society.
• UK house prices have been surging for 10 months straight, rising by 0.9% in May.

The UK’s housing market, which has been booming over the past two years, is headed for a slowdown. Considering the latest housing market data, which has shown signs of a slowdown, experts believe that the housing bubble may burst soon. From 14.3% in March and 12.1% in April, the yearly growth rate of house prices has dipped to 11.2% in May, as per the Nationwide Building Society.

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Lately, homeowners are resisting to move ahead as the economic uncertainty is rising, leading to a decline in the growth rate of the housing market. However, the growth rate is still in double digits and the house prices are still hitting the roof. Thus, it is still hard to fully predict the trajectory of the market. House prices have been surging for ten months straight, rising by 0.9% in May.

As per Halifax, house prices have reached a record-high level of £289,099 in May. Despite the average home prices surging by 10.5% in the year to May, the market is actually slowing down, as this is the slowest rate of growth witnessed since the beginning of the year. With a cooling market, mortgage activity has also started to decline amid the rising inflationary pressures.

Considering the latest housing market data, the peak has been left behind as the demand is following a downward trend. Amid the spiraling cost-of-living crisis, Brits have been struggling to climb the property ladder. On 9 June, UK PM Boris Johnson pledged to bring reforms in the housing market in response to the criticisms being faced by the Government for not doing enough to tackle the cost-of-living crisis.

Under the newly announced housing plans, the Right to Buy scheme shall be extended to the housing association tenants, benefiting around 2.5 million tenants. For every social home sold, a new one would be built. Additionally, accessibility to mortgage funding would be independently reviewed for first-time buyers, for widening the convenience of financing. The PM also declared a Benefits to Bricks scheme for letting welfare payments secure mortgages.

Amid the expectations of a housing market slowdown, investors can keep an eye on these 3 UK real estate stocks offering good returns.

RELATED READ: Johnson set to table new plan for UK economy. FTSE stocks to explore

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BMO Commercial Property Trust Ltd (LON: BCPT)

The shares of BMO Commercial Property Trust Ltd were up by 0.17% at 2:41 PM (GMT+1) on 10 June 2022 and were trading at GBX 119.20. On a year-to-date basis, the FTSE250-listed company has given its shareholders a return of 13.71% as of 10 June 2022, while the one-year return stands at 29.78%. The current market cap of the company stands at £862.62 million.

AEW UK REIT plc (LON: AEWU)

The shares of AEW UK REIT plc were down by 0.16% at 2:44 PM (GMT+1) on 10 June 2022 and were trading at GBX 122.80. On a year-to-date basis, the company has given its shareholders a return of 9.45% as of 10 June 2022, while its one-year return stands at 29.95%. The current market cap of the company stands at £196.13 million.

RELATED READ: HWG, PCA, HRE: Housing stocks to explore amid rising prices

Empiric Student Property plc (LON: ESP)

The shares of Empiric Student Property plc were down by 2.08% at 2:46 PM (GMT+1) on 10 June 2022 and were trading at GBX 89.50. On a year-to-date basis, the company has given its shareholders a return of 4.07% as of 10 June 2022, while its one-year return stands at 4.09%. The current market cap of the company stands at £551.33 million.