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09 June 2020

Housing Market: A Stuttering Start

Saul Fulda, Investment Analyst, Redmayne Bentley
 
Over the past seven days, we have read positive statements from key players in the UK housing market. Last week, Taylor Wimpey talked of “sustained demand”, while this morning Bellway mentioned its “sizeable forward order book”.

The market is often viewed as an important gauge in measuring consumer confidence which, as we are all too aware, has suffered dreadfully over the past couple of months. Yet, question marks remain as to whether this has changed.

Although there has been talk around the movement in enquires, the figures for transactions do not match-up; given the uncertainty and insecurity surrounding consumers’ employment, this is not surprising. Moreover, lenders will be cautious to approve mortgages for anyone currently furloughed. This captures around 8 million people, over 10% of the UK’s population. Furthermore, while viewings are now permitted, they are limited to single family groups and operate under draconian restrictions.

Bellway’s figures depict the damage from the lockdown; the net reservation rate has rapidly degenerated to an average of 71 homes per-week (23 March to 31 May), compared to the 231 per-week over the same period last year.

While the growth of consumer interest is a welcome addition, the outlook remains adust, and until we see a demystifying of such uncertainty, the housing market will remain subdued.  
 
Please note that investments and income arising from them can fall as well as rise in value. Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
 
Housing Market: A Stuttering Start
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