The UK’s largest housebuilders have long complained about a lack of demand for their properties. After several years of above-inflation wage growth, hopes had been building that more people would finally be able to afford new homes. Knocking those hopes back down, however, has taken only a few weeks.
A dour trading update from Berkeley Group this week highlighted the potential damage if, as many economists fear, rising energy prices cause a period of stagflation. Berkeley said it would halt land purchases and slow the pace of construction on its existing sites to reflect slower sales. Its shares dropped 10 per cent after the announcement.
It is not alone in its struggles, with shares across the sector taking a battering recently. Northern peer Persimmon is also in danger of falling out of the FTSE 100, while larger rival Barratt Redrow is the worst performer in the benchmark index year to date. Another housebuilder, Vistry, has the bottom spot in performance terms in the mid-cap FTSE 250.