Focus on 3 FTSE housing stocks as UK house prices soar in June

Summary

  • UK’s average property prices rose to £230,700, soaring 30 per cent above peak levels last seen in December 2007, at £177,300.
  • The boost was due to severe stock shortages and also due to stamp duty holiday and other schemes.
  • Property prices are expected to fall by the end of 2021 due to the stamp duty holiday and the furlough scheme ending by the end of September. 

UK’s average property prices rose to £230,700, almost 30 per cent higher from the peak last seen in 2007 before the global recession hit, according to the June 2021 house price index data from property website Zoopla.

Zoopla had recorded UK’s average house price in December 2007 at £177,300. Also, the June 2021 housing price index rose by 5.4 per cent on a year to date basis.

The housing sector has witnessed a boom despite the pandemic due to stamp duty holiday and other favourable government initiatives. Moreover, a severe stock shortage in the housing market has helped boost property prices even further. 

However, industry experts are of the view that housing prices may see a fall towards the end of 2021 due to the stamp duty holiday and furlough schemes ending towards the end of the year,

The stamp duty holiday ended on 30 June, and reduced stamp duty is currently in place, which will run from 1 July to 30 September for residential properties. Also, the furlough scheme extension is expected to close by 30 September 2021.

Let us take a look at 3 FTSE listed stocks in the real estate sector and how they reacted to the news:

  1. RIGHTMOVE PLC (LON: RMV)

FTSE 100 index listed firm RIGHTMOVE is the largest real estate website in the UK. The company said that H1 2021 was the busiest ever in terms of sale since 2000. The company reported 140,000 more sales were made in the period compared to the long term average. 

Rightmove is expected to announce its official H1 2021 results later this week, on 30 July.

(Image Source: Refinitiv)

The company’s shares were trading at GBX 671.40, up by 0.48 per cent as of 27 July, at 10:01 AM GMT+1. Meanwhile, the FTSE 100 index was trading at 6,968.04, down by 0.82 per cent.

Rightmove’s market cap stood at £5.736 billion on 27 July and its year to date returns were at 3.16 per cent.

Also Read: Savills Plc and Rightmove Plc in action as Housing Prices Rise Over 10% in May

  1. Grainger PLC (LON: GRI)

FTSE 250 index listed firm Grainger PLC is a UK based residential property company. The firm recently announced that the Gatehouse Apartments in Southampton was fully leased in just 3 months. It was a record lease up, as it was completed over 8 months ahead of its lease up schedule, which was previously projected at 12 months.

This was Grainger’s first built to rent (BTR) development in Southampton. It is expected to build 4 more BTR this year in other cities.

(Image Source: Refinitiv)

The company’s shares were trading at GBX 302.00, down by 0.33 per cent as of 27 July, at 11:09 AM GMT+1. Meanwhile, the FTSE 250 index was trading at 22,889.55, down by 0.19 per cent.

Grainger’s market cap stood at £2.041 billion on 27 July and its year to date returns were at 6.42 per cent.

  1. Savills PLC (LON: SVS)

Another FTSE 250 index firm, Savills is a global real estate company. The company announced a revised forecast for the housing sector, increasing it to 9 per cent price growth in 2021, from a previous estimate of 4 per cent due to tax holiday extension.

It still expects the sector to grow by 21.5 per cent in the next five years, in-line with the company’s previous projections.

(Image Source: Refinitiv)

The company’s shares were trading at GBX 1,091.00, down by 0.64 per cent as of 27 July, at 11:28 AM GMT+1. Meanwhile, the real estate services sector index was trading at 2,848.07, up by 0.25 per cent.

Savills’ market cap stood at £1.570 billion on 27 July and its year to date returns were at 14.30 per cent.

Also Read: Focus On 3 FTSE Real Estate Stocks as UK Housing Prices Likely to Rise for Next 5 Years

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