On Monday, it emerged that mortgage lending fell to a record low in April, with only 58,000 home loans compared with 113,000 in April last year.
The annual number of housing transactions is forecast to fall to 950,000 this year, down from 1.3 million last year, according to Capital Economics. The decline is expected to pile more pressure on sectors such as DIY and big-ticket furniture.
Kaupthing analyst Matthew McEachran said: “If you’re going to sell a house, the first thing you’re going to do is some DIY and if you’re buying a house, the first thing you’ll do will be DIY – replacing that stained carpet, for instance.”
The theory that people who choose not to move house or take a foreign holiday this year might opt instead to improve their homes may be true, McEachran observed, but it was still likely that DIY would be hit hard.
“The core DIY market is likely to be 10 per cent down [this year]. It’s very volatile – things are swinging violently from month to month,” he said.
McEachran added that store groups such as Kingfisher, Home Retail, Topps Tiles and Carpetright could all suffer from the housing slowdown and that even value retailer Dunelm – despite a strong store opening programme and other growth drivers – may be affected.
A similar view was taken by Pali International analyst Nick Bubb. He noted that, although the share prices of furniture groups Land Of Leather and ScS bounced earlier this week, both face parlous prospects and furniture sales at department store group John Lewis have been going down.
Bubb added that Carpetright often outperformed rival Allied Carpets during downturns and speculated that Allied’s French owner, Saint Maclou, might even decide to exit the UK.
No comments yet