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

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Shares in U.K. Homebuilders Slide After HSBC Downgrades Sector
Credit: © Reuters.

By Scott Kanowsky -- 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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