FTSE 250 movers: Property stocks out of favour

There was little to drive trade in the week before Christmas. Property stocks were in the red after Nationwide forecast house prices are likely to fall by 5% next year, as borrowers face higher interest rates and a squeeze on earnings.

Publishing its review of the current year alongside forecasts for 2023, the building society said the UK housing market had been "remarkably resilient" during the first three quarters of 2022. However, the government’s ill-received mini budget in September represented a "major shock", causing house prices to start to fall.

The budget included £45bn of unfunded tax cuts but no spending plans or economic forecasts. In response, the pound plunged while mortgage rates and bond yields spiked, and eventually the Bank of England was forced to step in.

Robert Gardner, Nationwide’s chief economist, said: "The financial market turbulence represented a major shock to the housing market.

"The number of mortgage applications slumped to lows seen at the start of the pandemic as a spike in long term interest rates quickly fed through to mortgage rates and fundamentally changed the affordability dynamic for prospective buyers."

Looking to 2023, Gardner warned that house prices would likely to fall by around 5%, noting: "It will be hard for the market to regain much momentum, with economic headwinds set to strengthen as real earnings fall further, the BoE moves interest rates higher and with the labour market widely projected to weaken as the economy shrinks."

Gardner said the correction was likely to be "a relatively soft landing", however, with activity stabilising "modestly" below pre-pandemic levels.

Nationwide expects the BoE to raise interest rates, currently at 3.5%, "a little further" alongside a "modest" deterioration in the labour market. It expects unemployment to reach 5%, a significant rise on the current rate of 3.7%, but still low by historic standards.

The news hit shopping centre owner Hammerson, West End landlord Shaftesbury and Capital & Counties Properties.

FTSE 250 - Risers

Volution Group (FAN) 348.50p 4.81%
Bytes Technology Group (BYIT) 389.20p 2.75%
Johnson Matthey (JMAT) 2,155.00p 1.89%
Ferrexpo (FXPO) 162.30p 1.88%
Investec (INVP) 497.60p 1.45%
Bank of Georgia Group (BGEO) 2,505.00p 1.21%
Elementis (ELM) 118.10p 1.20%
BH Macro Ltd. GBP Shares (BHMG) 4,560.00p 1.00%
TBC Bank Group (TBCG) 2,170.00p 0.93%
Lancashire Holdings Limited (LRE) 607.50p 0.91%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 167.60p -5.31%
Shaftesbury (SHB) 350.20p -3.63%
Warehouse Reit (WHR) 103.00p -3.56%
National Express Group (NEX) 132.00p -3.15%
Helios Towers (HTWS) 103.30p -3.10%
Capital & Counties Properties (CAPC) 100.20p -3.00%
Hammerson (HMSO) 22.68p -2.99%
Molten Ventures (GROW) 340.20p -2.97%
Assura (AGR) 53.10p -2.75%
Fidelity China Special Situations (FCSS) 232.50p -2.72%