PSN, BKG, RDW: Stocks to watch as UK housing affordability hits record low

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PSN, BKG, RDW: Stocks to watch as UK housing affordability hits record low

 PSN, BKG, RDW: Stocks to watch as UK housing affordability hits record low
Image source: © Flynt | Megapixl.com

Highlights

•    London seems to be burning a hole in homebuyers’ pockets with the mean house price now around £534,977.
•    The cost of a typical house in the first quarter of this year was £279,431, compared to a full-time warning of £39,402.
•    London and Westminister are dubbed be one of the costliest cities to buy a house in.

London is the most unaffordable region in the UK, with houses in the city costing nearly ten times the average local income due to a huge gap between demand and supply and housing affordability hitting its lowest level during the pandemic, a new study suggests.

The cost of a typical house in the first quarter of this year was £279,431.

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According to a study by the Halifax House Price Index, the cost of a typical house in the first quarter of this year was £279,431, compared to a full-time warning of £39,402. It is now 7.1 times the average earnings, the least affordable level ever recorded. 
The house prices in the UK have been going north since the pandemic started more than two years ago. In fact, the prices have increased by 16.8% from £239,281. This put the average earnings up by 2.7% from £38,374 over the same period, putting the price-to-income ratio at 6.2 times.

London topped as the costliest UK city to buy a house, with the mean price now hovering at £534,977. This puts the house price to income ratio at 9.7 times, up by 0.7 since the start of the pandemic and 2.9 since 2007. The ratio is the highest across the UK, even though the house prices have increased at the slowest rate over the last two years. As per the latest data, the housing prices in London have risen by 7.9% from April 2022.
However, the Northeast of England is currently the most affordable area to buy a house, the mean price is around £1,62,692. The region's house price to earnings ratio stood at 4.6, down from 5.8 times in 2007. 

London and Westminster topped the list as the costliest cities with the average housing prices increasing by 14.5 times average earnings.

A close look at some stocks that investors may look at before making an investment call.

Persimmon Plc (LON: PSN)

The shares of the UK-based home construction company, which is involved in designing, developing, and building residential housing units, were up by 0.86% at 08:22 AM (GMT+1) on 27 June 2022 and were trading at GBX 1,887.50. The FTSE 100 company’s share value has gone down in the last one year, where the one-year returns stood at -36.19%, and YTD return was -33.82%, as of 27 June 2022. Persimmon Plc's market cap, as of 27 June 2022, was £5,977.30 million.

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Berkeley Group Holdings Plc (LON: BKG)

The shares of the UK-based home construction company, Berkeley Group Holdings Plc, were up by 0.67% at 08:15 AM (GMT+1) on 27 June 2022 and were trading at GBX 3,761.00. The FTSE 100 company has not done well in the last one year, as its one-year return stood at -19.10%, while its YTD return was -21.49%, as of 27 June 2022. Berkeley Group Holdings Plc's market cap, as of 27 June 2022, was £4,153.80 million.

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Redrow Plc (LON: RDW)

The shares of the UK-based leading builder of premium new homes for sale, Redrow Plc, were up by 0.77% at 08:12 AM (GMT+1) on 27 June 2022 and were trading at GBX 500.00. The Ewloe-headquartered company’s share value has gone down and was at -19.02% in the last one year, as of 27 June 2022. Its YTD return was -28.65%. Redrow Plc's current market cap, as of 27 June 2022. £1,747.57 million.

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.

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