UK housing market hits new high in Jan: 5 stocks to watch out for

Highlights

• The demand in the UK’s housing market hits a new six-month high in January.
• According to a survey by the Royal Institute of Chartered Surveyors, the growth in housing prices was led by the southeast and northwest of England as homes for sale remained in short supply.
• According to the Halifax House Price Index, the average UK house price reached a record high of £276,759 in January.

The pandemic has affected the growth of various industries in the UK, but the price of houses has increased to manifolds. The demand in the UK’s housing market hit a new six month high in January, but the momentum in the housing market may soon fade as warned by the real estate agents, as Bank of England interest-rate hikes and the growing cost of living squeeze may put off buyers and add to already record growth in the need for rental properties.

According to a survey from the Royal Institute of Chartered Surveyors, the growth in housing prices was led by the southeast and northwest of England as homes for sale remained in short supply. However, as buying of properties has become unaffordable for Brits, the demand for rental properties surged at the fastest pace since 1999.

The average cost of rental properties increased by 8.3% to around £1,000 a month in the last three months of 2021, the fastest surge in a decade. In the last one year, rents across the UK have increased, where renters paid more than £62 each month than before the pandemic, according to property website Zoopla.

The UK’s housing market gained momentum in prices despite the discontinuation of temporary tax breaks on a property purchase in the second half of last year. According to the Halifax House Price Index, the house prices growth slowed to 0.3% in January, the weakest monthly increase since June last year. The average UK house price reached a record high of £276,759 in January 2022, up by £24,500 over the last year, and £37,500 higher than what it was two years back. 

The average house prices across the UK surged by over £100,000 in the last one decade, up by 53% to £341,019, according to the data provided by Rightmove.  

The annual rate of growth in average housing prices of the UK remain unchanged in January at 9.7%, with Wales having the strongest start of 2022, with the annual house price inflation of 13.9% as compared to last January to average property valuation of £205,253. Northwest England average property valuation stood at £213,200, up by 12% year-on-year. London remains the weakest performing region in January where annual house prices increased for a third straight month to 4.5%.  

Also Read: Rightmove (RMV) & Grainger (GRI): 2 real estate stocks to buy

Let us now look at five FTSE housing stocks in UK that may be impacted .

Barratt Developments Plc (LON: BDEV)

FTSE 100 constituent Barratt Development Plc is a residential property development firm in the UK engaged in acquiring land and securing planning consents, besides building the highest quality homes.

Barratt Development Plc has given a return of -8.29% to its shareholders in the last one year and its year-to-date return stands at -14.47% as of 10 February 2022. Its shares were trading at GBX 639.80, up by 1.01%, at 9:15 AM BST, with a market capitalization of £6,476.84 million on 10 February 2022.

Persimmon Plc (LON: PSN)

Persimmon Plc is a home building company in UK that constructs houses ranging from as high as executive family homes to small studio apartments. The FTSE 100 constituent has given a return of -8.15% to its shareholders in the last one year and its year-to-date return stands at -13.04% as of 10 February 2022. Its shares were trading at GBX 2,482, up by 0.41%, at 9:15 AM BST, with a market capitalization of £7,891.07 million on 10 February 2022. 

Redrow Plc (LON: RDW)

Redrow Plc is one of the largest housebuilding companies with a network of 14 operational divisions across the UK. The FTSE 250 constituent has given a return of 16.11% to its shareholders in the last one year and its year-to-date return stands at -8.88% as of 10 February 2022. Its shares were trading at GBX 636.60, up by 1.79%, at 9:15 AM BST, with a market capitalization of £2.202.60 million on 10 February 2022.

Also Read: How hike in interest rates will hit Britons

Vistry Group Plc (LON: VTY)

Vistry Group Plc is a developer of sustainable new homes and communities across all sectors of the UK housing market. The FTSE 250 constituent has given a return of 22.61% to its shareholders in the last one year and its year-to-date return stands at -9.12% as of 10 February 2022. Its shares were trading at GBX 1,076, up by 0.66%, at 9:15 AM BST, with a market capitalization of £2,376.37 million on 10 February 2022.

Belvoir Group Plc (LON: BLV)

Belvoir Group Plc is the UK’s largest franchised property company that sells, supports and trains residential letting and sales franchisees. The FTSE AIM All-Share constituent has given a return of 38.69% to its shareholders in the last one year and its year-to-date return stands at -4.75% as of 10 February 2022. Its shares were trading at GBX 250, down by 1.96%, at 9:15 AM BST, with a market capitalization of £95.09 million on 10 February 2022.