PSN, BDEV, TW.: Stocks to watch as UK housing market shows signs of slowdown

Highlights

• The growth of average UK house price slowed in June while hitting a new record high, as economic slowdown, rising interest rates, and cost of living squeeze affected the market.
• The UK annual house price growth slowed for the third consecutive month from 11.2% in May to 10.7% in June.
• The South West Zone was one of the better-performing regions with house prices jumping by 14.7% year-on-year in the last quarter.

The UK housing market slowed down despite hitting a record high of £271,613 in June. The housing market has been under the pump due to rising inflation, increased pressure due to the cost-of-living crisis, and rising interest rates.

According to the recently released Nationwide report, the annual rate of house price growth has fallen to 10.7% from 11.2% last month, its third monthly decline in a row. Although, the housing market saw a month-on-month increase of 0.3%, which took the median cost of houses to £271,613. 

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The South-West zone of England surpassed Wales as the best performing region for homebuyers with a jump of 14.7% annually. London was the lowest-performing region with a decrease in annual price growth by 1.4% to 6%.

With inflation expected to hit double digits in the coming months, it will exert a cooling impact on the UK housing market. There is already a drop in the new buyers’ inquiries and the number of mortgage approvals, which have fallen back to pre-pandemic levels in April this year.

Let us look at 3 FTSE-listed housing stocks that you may closely look at as the UK housing market showing signs of a slowdown.

Persimmon Plc (LON: PSN) 

The FTSE 100-listed company is one of the leading housebuilding businesses in the UK and operates under the brand names: Charles Church, Persimmon Homes, and Westbury Partnerships. The company's market cap stood at £6,116.23 million as of 30 June, with a P/E ratio of 7.79 and an annual dividend yield of 12.27%. On a YTD basis, Persimmon hasn’t offered any great value to its investors. Its value was -36.34%, while its one-year return was -39.95%, as of Thursday. At 10:50 AM (GMT+1), the company's shares were trading at GBX 1,817.50, down by 5.09%. 

Barratt Developments Plc (LON: BDEV) 

The Coalville-headquartered company, founded in 1958, is one of the largest residential property development companies and is engaged in acquiring and constructing residential properties. The company's market cap stands at £4,867.38 million as of 30 June, with a P/E ratio of 7.43 and an annual dividend yield of 7.0%. On a YTD basis, Barratt Developments Plc’s share value has gone down and was -39.30%, while its one-year return stood at -35.69%. At 11:02 AM (GMT+1), the FTSE 100-listed company's shares were trading at GBX 453.60, down by 4.71% on Thursday. 

Taylor Wimpey Plc (LON: TW.)

The High Wycombe-headquartered residential developer, Taylor Wimpey Plc's market cap stands at £4,183.64 million as of 30 June, with a P/E ratio of 7.78 and an annual dividend yield of 7.2%. On a YTD basis, Taylor Wimpey Plc offered its shareholders a negative return of 34.59%, while its one-year return was -29.21%. At 11:16 AM (GMT+1), the FTSE 100 listed company's shares were trading at GBX 114.55, down by 3.29% as of Thursday. 

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.