PCA, BCPT, SUPR: Stocks to watch as housing affordability take a hit

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PCA, BCPT, SUPR: Stocks to watch as housing affordability take a hit

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 PCA, BCPT, SUPR: Stocks to watch as housing affordability take a hit
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Highlights

  • Housing affordability in England reached a record-low level in the year ending March 2021, as per ONS data.
  • England hasn’t witnessed a purchase affordability ratio of 8.7 since 1999.
  • The affordability ratios stood at 5.5 in Scotland and 6.0 in Wales.

Housing affordability in England has worsened and reached a record low level in the financial year ending 31 March 2021, as per the Office for National Statistics (ONS). According to the ONS report on housing purchase affordability released on Thursday, the cost of buying an average home in England was around 8.7 times the yearly disposable income of households on average.

The purchase affordability ratio in England has never been this low since the records began in 1999. While England witnessed a record low level, the purchase affordability ratios also fell below their peaks in Wales and Scotland, which had previously witnessed their lowest ratios in 2007 and 2008, respectively. As per the latest figures, the affordability ratios stood at 5.5 in Scotland and 6.0 in Wales.

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Across English regions, nearly 12 years of a poor household’s income cost the equivalent of an average house in the North East.  In comparison, income earned over 14 years was needed to buy an average-priced house in London.

As North East is a relatively affordable English region, cheaper houses are available there for sale at a cost equivalent to about five times the disposable income of a low-income household. However, in London, homes with lower prices are available for a cost equivalent to five times the disposable income of a higher-income household.

With housing affordability taking a hit, UK investors can look at investing in the following stocks.

Palace Capital plc (LON: PCA)

The shares of the regional property investor, Palace Capital plc, were trading at GBX 285.00 at 11: 47 AM (GMT+1) on Friday. As of 29 July, the company holds a market cap of £125.48m. Palace Capital has provided positive returns to its shareholders over the past 12 months, with its returns on YTD and one-year basis standing at 5.69% and 11.49% as of 29 July, respectively. It is currently offering an annual dividend yield of 3.7%. However, its earnings per share stand in the negative territory at -0.12.

Balanced Commercial Property Trust Ltd (LON: BCPT)

The shares of the vehicle exposing investors to UK commercial property, Balanced Commercial Property Trust Ltd, were up by 0.17% at 11: 55 AM (GMT+1) on Friday and were trading at 119.60. As of 29 July, the company holds a market cap of £851.86m and is a part of the FTSE 250 index. Balanced Commercial Property Trust has provided positive returns to its shareholders over the past 12 months, with its returns on YTD and one-year basis standing at 14.07% and 29.76% as of 29 July, respectively. It is currently offering an annual dividend yield of 2.9%. However, its earnings per share stand in the negative territory, at -0.11.

Supermarket Income REIT Plc (LON: SUPR)

The shares of the real estate investment trust, Supermarket Income REIT Plc, were up by 0.78% at 11:59 AM (GMT+1) on Friday and were trading at 128.50. As of 29 July, the company holds a market cap of £1,580.83m and is a part of the FTSE 250 index. Supermarket Income REIT has provided positive returns to its shareholders over the past 12 months, with its returns on a YTD and one-year basis standing at 5.01% and 6.60% as of 29 July, respectively. It is currently offering an annual dividend yield of 3.8%. However, its earnings per share also lie in the positive territory, at 0.13.

 

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