The stock market has been a rollercoaster ride in 2022, with household building shares taking a colossal hit. These shares have been the poorest performers in 2022, dropping by over 30%. This number raises the question: is this an opportune time to buy shares in the household building industry, or is it a risk?
As we dive into the current state of the market and the factors at play, one thing is sure, the future of household building shares is worth our attention. So, buckle up, and let’s explore whether now is the time to invest or if it’s best to wait it out.
What are Household Shares
Housebuilding shares refer to stocks of companies involved in construction, house sales, and other residential properties. These companies are also active in land development for residential purposes and the oversight of communities and neighborhoods. Examples of housebuilding shares include home builders, real estate developers, and home construction companies.
Why Household Shares Fell in 2022
The household building industry has faced several challenges in 2022, contributing to the sharp decline in equities. One major factor is the high inflation rate in the building sector, which has surpassed 5%.
This inflation has led to rising costs for companies in the industry, making it difficult for them to profit. Additionally, the government’s decision to stop accepting new applications for the “Help to Buy” scheme and plans to end it in March 2023 has also played a role in the drop.
This popular program, which helped many people afford to buy their own homes, will no longer be available, potentially reducing demand for new builds. These factors combined have created a perfect storm for the household building industry and its investors.
Should you Buy Household Shares in 2023?
With this information on the sector in mind, it is crucial to consider whether now is the time to buy shares in the household building industry. Unfortunately, the outlook for the sector is not promising. Analysts expect further drops this year, with some predicting a decline of over 8%.
Furthermore, major players in the industry, such as Persimmon, have reported a significant drop in sales. With numbers down by over 30% to $1.1 billion. Additionally, the average Consumer Price Index (CPI) in December was 10%, which indicates a high inflation rate, further complicating matters for the industry.
Given this data, holding off on buying and selling shares in the household building industry may be prudent. While the market is likely to experience more drops in H1 and H2, it’s impossible to predict when it will happen. Therefore, it’s essential to be patient and wait for more stable conditions before making investment decisions.