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Highlights:
- Property sales in the UK collapsed at the fastest rate in September since the COVID-19 pandemic.
- The latest data comes as mortgage rates have already breached the 6% mark.
Mortgage rates in the UK have been soaring due to anticipations that the Bank of England will opt for a bigger interest rate hike in November. The anticipations are a result of Chancellor Kwasi Kwarteng's mini-budget announced two weeks ago, which pushed the pound sterling to record lows against the US dollar.
The mortgage rates saw a steep rise in the aftermath of the mini-budget and have currently crossed the symbolic landmark of 6%. As a result, property sales in the country are declining at the fastest rate since the pandemic.
According to data firm TwentyCi, 29.3% of agreed sales collapsed before completion in September, a rise from 27% in August. This is the steepest growth recorded since 2020 when the COVID-19 lockdown had shut down the housing market. Against the pre-pandemic period of 2019, the collapsing sales are 16% higher for the same month.
Image Source: © Flynt | Megapixl.com
Notably, the property market in the UK is showing signs of a slowdown amid inflationary pressures. In the mini-budget, the Chancellor announced a rise in the stamp duty threshold and additional measures for first-time buyers. However, many are still likely to find it difficult to afford a new home.
While property sales are collapsing at a faster rate, investors can look at the below London-listed stocks.
Rightmove Plc (LON: RMV)
The country's largest online real estate portal belongs to the blue-chip FTSE 100 index. With a market cap of £3,993.80 million, the company presently has a positive EPS of 0.21. Its 12-month return is currently at -30.9%, and the year-to-date or YTD return is -41.22%. Shares of RMV traded at GBX 467.40, down 2.79% as of 9:04 am GMT+1 on Friday.
Grainger Plc (LON: GRI)
The FTSE 250-listed residential property business has a market cap of £1,668 million. The EPS is in the positive territory at 0.16, and the company's 12-month return is -24.80%. The YTD returns are further down at -28.76%. GRI shares traded 0.27% lower at GBX 224.40 as of 9:97 am GMT+1 on Friday.
Vistry Group Plc (LON: VTY)
Another FTSE 250 listed real estate group is Vistry Group, which operates across 13 business units across the country. Shares of VTY were down 1.21% and were trading at GBX 9:09 am GMT+1 on Friday. Its one-year and YTD returns stand at -49.23% and -51.56%, respectively. The company currently has a market cap of £1,263.72 million and a positive EPS of 1.15.
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.
