If the equity market is a proxy for what is likely to happen 12-18 months down the line, it looks housing market is set for a fairly big reset.
That's because the share prices of the UK's biggest quoted builders have undergone something of a reset in the year to date, with valuations down between 20% and 30% in that time.
Now it seems the slowdown predicted by the crystal ball gazers behind the big reset is starting to materialise. House prices increased in July at the slowest monthly pace in a year, according to a report from mortgage lender Nationwide.
The average cost of a home was £271,209, up 10.7% year on year. And while the market recorded its 12th consecutive monthly increase, it was a barely discernable 0.1% in July compared with double that figure in June.
Nationwide warned the market is likely to slow further as the cost-of-living squeeze tightens and the Bank of England keeps raising interest rates.
Taylor Wimpey PLC (LSE:TW.) is expected to conclude the earnings season for blue-chip builders on Wednesday (Aug 3) when it reports its half-year results. It is up against tough comparatives after a record first half last year.
In April, the housebuilder told investors it was trading in line with full-year expectations and remained on track to deliver against guidance set out at the time of its 2021 annual results.
At that time it said continued levels of house price growth were offsetting inflationary labour and material costs.
As of April 17, the total order book value of the third-largest homebuilder in Britain was around £2.97bn, up from £2.80bn a year ago.
The FTSE 100 company said its target in 2022 is to deliver operating profit margins of 21-22%.
Market consensus price targets estimate some 50% of upside to the current price, so expectations may be high given current market conditions and the expected rising cost of mortgages as interest rates increase.
Housebuilding peers have so far failed to give a reliable steer, with mixed fortunes across the bunch.
Barratt Developments PLC (LSE:BDEV) failed to meet its guidance for full-year home completions but did insist profit before tax is set to come in slightly ahead of market estimates.
Berkeley Group Holdings PLC (LSE:BKG) said last month it beat profit forecasts for the past year and upped its future guidance due to its "unrivalled" land holdings in London and South East.
Persimmon PLC (LSE:PSN) announced a fall in completions in the first half, as planning delays and supply chain problems took their toll, despite predicting half-year profits slightly ahead of expectations.