By Scott Kanowsky
Investing.com -- Shares in U.K. homebuilders fell sharply on Friday after HSBC (LON:HSBA) slashed its rating for the sector and warned of a widespread downturn in the country's housing market.
The bank's analysts predicted a "significant fall" in demand and prices for housing from the fourth quarter into 2023, citing a deteriorating macroeconomic outlook and a recent rise in mortgage rates to their highest level in six years.
HSBC expects demand to slide by 20% in the autumn, while home prices are predicted to slip by 7.5%. Profit before taxes at major British homebuilding firms are subsequently expected to drop by 43% from 2023 to 2024.
The brokerage also downgraded Berkeley Group Holdings PLC (LON:BKGH) to "reduce" from "buy," while several of its rivals were lowered to "hold" from "buy."
Shares in Berkeley, as well as peers Barratt Developments (LON:BDEV), Bellway PLC (LON:BWY), Persimmon (LON:PSN), and Taylor Wimpey (LON:TW), all fell to near the bottom of the pan-European Stoxx 600 in European trading.