Housing market: Shares in FTSE 100 house builders tumble as outlook weakens
Shares in FTSE 100 house building companies tumbled today after a flurry of damaging reports on the outlook for the housing market has shattered investor confidence.
As interest rates rise and borrowing rates become more expensive, London-listed building firms Persimmon Homes and Barratt Developments both saw shares tumble to 9.54 per cent and 3.73 per cent respectively on Wednesday morning.
Despite the fall in shares, both Persimmon Homes and Barratt Developments posted strong revenues for FY22 – however reporting on earnings began before the market started to rattle.
Investors are shying away from pumping their funds into the residential market after figures from the Bank of England show that mortgage approvals for house purchases plummeted to the lowest level since the 2008 financial crash.
The number decreased to 39,600 in January from 40,500 in December, marking the fifth consecutive monthly decrease in mortgage approvals. In January 2009 the figure stood at 32,400.
The outlook for the sector remains uncertain as house price growth has plummeted to its lowest in more than a decade as a cocktail of high borrowing costs, inflation and low confidence has deterred buyers.
Earlier this week, Nationwide’s House Price Index also revealed that properties dropped in value by -1.1 per cent year on year in February – pushing investor confidence down even further.
Furthermore, More than four in 10 (41 per cent) homes currently listed for sale on Zoopla have had their asking prices reduced to attract buyers.
Speaking at the time ,Richard Donnell, executive director at Zoopla said. “We believe the market remains on track for a soft landing in 2023 with modest price falls of up to 5 per cent and one million housing sales.”