Recession in the UK will spur only a “mild” decline in house prices, Liberum Capital Ltd said as it predicted a rally for beaten-down homebuilder stocks.
(Bloomberg) — Recession in the UK will spur only a “mild” decline in house prices, Liberum Capital Ltd said as it predicted a rally for beaten-down homebuilder stocks.
The firm expects house prices to fall 5% this year, while builders’ share prices are currently pricing-in a 13% drop, analyst Charlie Campbell wrote in a note. Liberum sees housebuilder stocks rising by an average of 28% in 2023.
Liberum has buy ratings on nine builders, including Persimmon Plc and Taylor Wimpey Plc, which are both due to give sales updates next week.
Disciplined lending practices in Britain mean homeowners are not financially overstretched, said Campbell. With the market under-supplied and employment expected to hold up well, “we don’t expect homeowners or developers to be forced sellers,” he added.
The comments put Liberum among the more-optimistic forecasters, with banks like JPMorgan Chase & Co. and Credit Suisse Group AG forecasting a 10% decline in house prices. Lender Halifax sees prices falling 8% this year.
A FTSE index tracking homebuilder stocks lost 44% last year amid predictions that the cost-of-living crisis and soaring mortgage rates would stifle demand for new homes. The benchmark is up around 7% this week amid a broader market rally.
–With assistance from James Cone.
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