Lens On 3 FTSE Real Estate Stocks as UK’s Housing Price Continues to Boom in May

Summary

  • UK’s house-price index in May soared due to continued supply crunch and robust demand.
  • Rics monthly report said that new listings were not sufficient for interested buyers, driving prices up throughout Europe.
  • Prices were already buoyed by pent-up savings and a temporary slash in tax on purchases.

Showing no signs of easing, UK’s house-price index in May soared as supply crunch and robust demand added further ammunition to an already raging market.

Royal Institution of Chartered Surveyors’ (Rics) monthly report said that new listings in May were not sufficient for interested buyers, which drove up prices throughout Europe.

Prices were already buoyed by pent-up demand and a temporary slash in tax on purchases. The gap in sale listings and buyer inquires widened to its steepest since 2013. The upward push on prices continued for the fourth consecutive month.

All areas recorded a rise in prices but south-west and north-west England, Northern Ireland, and Wales saw an exceptionally sharp rise. Real estate players anticipate that price rise would continue to increase over the next year, even though the stamp duty holiday would be phased out by this month-end.

The Rics survey found that real estate agents continued to report an uptick in agreed new sales as buyers wanted to make the best of the tax holiday that is set to end in June. Post June, for houses in Northern Ireland and England, purchases over £250,000 would be taxable, except for first houses. For Wales, the threshold would be back to £180,000.

The housing boom has now made the Bank of England concerned. Andy Haldane, its chief economist, recently sounded the alarm bell and warned increasing prices of houses is making inequality worse. House value increased by 11 per cent in the year through May, the fastest since 2014, Nationwide Building Society said.

Here are the three largest FTSE AIM All-Share stocks by market capitalisation and how they reacted to the development:

PurpleBricks Group Plc (LON: PURP)

The shares of the online estate agent were down 0.22 per cent and were trading at GBX 86.7 with a market capitalisation of £265.39 million. The FTSE AIM All-Share index was down 0.36 per cent at 1,245 on 10 June at 11.01 GMT+1.

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The company’s total instructions for the year ended 30 April 2021 increased 12 per cent to 60,238 from 53,680 last year. Instructions in the second half performed better than market expectations. Its balance sheet was strong at the end of the period, with cash on 30 April at £74 million compared to £75.8 million as of 31 October 2020.

Inland Homes Plc (LON: INL)

The shares of the brownfield regeneration company were Down 0.79 per cent and were trading at GBX 61.51 with a market capitalisation of £141.49 million.

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The company sold a newly built 105-bed hotel at the Wessex site, pre-let to Premier Inn for £588,000 annually. The sale was made to Aviva for £13.266 million. It also received permission for the planning of 514 homes, including 182 affordable ones at the Master Brewer site at Middlesex.

Property Franchise Group Plc (LON: TPGF)

The shares of the lettings and estate agency were down 1.47 per cent and were trading at GBX 290 with a market capitalisation of £94.20 million.

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The company signed a long-term agreement with LSL Property Services Plc. Under the agreement, LSL would offer protection advice and mortgage services to each franchise of TPFG, including those incorporated after the acquisition of Hunters Property Ltd. TPGF has 430 physical offices, holds a sale of circa 23,000 properties each year and manages over 73,000 tenanted properties.

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