Barratt Becomes Latest Victim of U.K. Homebuilder Buyer FatigueBy
Just as British home buyers are finding costs ever-so-slightly more affordable, the price of housebuilders is becoming an increasing stretch.
After a 44 percent gain in 2017, U.K. housebuilders have been among the worst-performing sectors in the early days of this year. Concerns surround the sustainability of builders’ gross margins in an environment where house prices are softening and construction costs potentially rising. Other jitters include a frail economy and concerns about labor supply in the construction industry following Brexit.
“Builders’ margins have been expanding for years because there has been net price inflation, and now there is danger of a mean reversion in margins,” Robin Hardy, an analyst at Shore Capital, said by phone. “It’s beginning to dawn on the market that’s going to happen. And they’ve had a good run. There is clearly negative momentum.”