More than £5billion has been wiped off the value of UK housebuilders since the start of the year.
Blue-chip builders Taylor Wimpey, Persimmon, Barratt Developments and Berkeley have lost £4.1billion in total – the worst fall since the market crash of March 2020.
Mid-cap firms Bellway, Crest Nicholson, Redrow and Vistry Group lost another £1.1billion.
Crash: The decline marks a sharp reversal in the sector’s fortunes from the onset of the pandemic
The decline marks a sharp reversal in the sector’s fortunes from the onset of the pandemic, when record low interest rates, cheaper mortgages and a ‘race for space’ sent buyers into the suburbs and countryside.
The Treasury poured fuel on the fire with a stamp duty holiday, allowing many first-time buyers to put up a deposit.
But with the stamp duty holiday over, interest rates rising and the cost of living squeezed by inflation and soaring energy prices, investors fear housing demand could be about to slow.
The pressure looks set to increase this year, with markets predicting that the Bank of England could raise interest rates to 2 per cent by May, and builders facing the cost of removing unsafe cladding.
In a recent report to clients, Credit Suisse analysts said: ‘UK housebuilders appear to face a list of challenges for 2022, including labour inflation, higher interest rates, lower affordability and incremental risks around legacy fire safety costs.’
But Credit Suisse said those pressures could ease during the year, adding that it sees ‘earnings and higher cash returns as well supported.’
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