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Shares in U.K. Homebuilders Slide After HSBC Downgrades Sector

By Scott Kanowsky 

Investing.com -- Shares in U.K. homebuilders fell sharply on Friday after HSBC slashed its rating for the sector and warned of a widespread downturn in the country's housing market.

The bank's analysts predicted a "significant fall" in demand and prices for housing from the fourth quarter into 2023, citing a deteriorating macroeconomic outlook and a recent rise in mortgage rates to their highest level in six years.

HSBC expects demand to slide by 20% in the autumn, while home prices are predicted to slip by 7.5%. Profit before taxes at major British homebuilding firms are subsequently expected to drop by 43% from 2023 to 2024.

The brokerage also downgraded Berkeley Group Holdings PLC (LON:BKGH) to "reduce" from "buy," while several of its rivals were lowered to "hold" from "buy."

Shares in Berkeley, as well as peers Barratt Developments (LON:BDEV), Bellway PLC (LON:BWY), Persimmon (LON:PSN), and Taylor Wimpey (LON:TW), all fell to near the bottom of the pan-European Stoxx 600 in European trading.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.