Davy Research |
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Construction and Housebuilding
UK housing transactions remain steady
22 June 2012
Flor O'Donoghue
FACTS: According to HM Revenue & Customs, on a seasonally adjusted basis, there were 73,000 UK housing transactions (with a value of £40,000 and over) in May. This was up 4% year-on-year (yoy) and 2,000 higher than in April. For the quarter to end-May, transactions were 9% higher than the same quarter last year.
ANALYSIS: May's figures confirm that housing transactions in the UK remain stable and consistent with the underlying trends of the past while. As activity was flattered in Q1 (up 15% year-on-year) by the expiry at the end of March of stamp duty-based incentives, it should imply that the quarterly run-rate moderates in June. As has been the case now for a prolonged period, current activity rates remain well below the long-term monthly average of 120,000 transactions.
DAVY VIEW: The latest figures are relatively encouraging given the subdued economic environment in the UK and evidence elsewhere in Europe which suggests that housing markets are under pressure. The relevant read-through is for Travis Perkins (100% UK revenues) and Grafton (over 70%). Wolseley (under 15% of group revenues), Saint-Gobain (under 10%), SIG (over 40% but over half non-residential) and Kingspan (over 35% but more skewed towards non-residential) would also have exposure to the knock-on effects from housing transactions (upgrading, renovating, modernising, retrofitting etc).