DIY chains enjoy bumper year as UK property market slows | Retail industry
Home decor retailers are enjoying a glittering year on the London stock exchange as cash-strapped UK consumers turn to DIY projects after being starved of prices for house flipping or expensive renovations.
Listed retailers including B&Q owner Kingfisher, Topps Tiles, Wickes and sofa retailer DFS are on track for double-digit percentage share price gains of up to 56% this year.
Kingfisher and Topps Tiles reported share price gains of 26.5% and 13% respectively; this was their best annual gain since the pandemic. The 23% year-to-date increase in DFS was the strongest year since 2019.
Kingfisher, which also operates in France and Poland, has issued two profit upgrades since September following the company’s strong performance in the UK.
The biggest gainer was leading paint retailer Wickes, whose shares rose 56% in 2021 in its best year since listing on the London Stock Exchange.
Retailers in the home improvement sector benefited from the closure of rivals Homebase, which collapsed into administration in November last year.
Analysts noted that the housing market was sluggish: Halifax, the UK’s largest mortgage lender, reported flat growth in house prices in November and a significant slowdown in annual growth to 0.7%, from 1.9% in the same month last year.
The slowdown in home prices reflects weakening buyer demand as cash-strapped consumers focus on cheaper DIY projects to spruce up their existing homes.
Measures introduced in last month’s budget, including increasing the minimum wage and changing property taxes, could further boost the DIY market as the cost of activities such as dining out rises.
“This could fuel a continued shift toward eating out and spending more time at home,” says RBC Capital Markets analyst Manjari Dhar. he told Bloomberg.
Data from the Office for National Statistics (ONS) shows spending on household goods has mostly outpaced retail sales this year.
But ONS figures show the unemployment rate hit a four-year high of 5.1% in the three months to October; This could slow down the DIY boom.
While home furnishings retailers had an excellent year, share prices of building material suppliers fell; This suggests that some homeowners are putting major home renovation projects on the back burner.
Shares in kitchen supplier Howden Joinery Group have risen 5% this year, while Travis Perkins has fallen 11%.
Earlier this month Halifax said buyers trying to get on the property ladder in the UK were now in the best position to buy a home in a decade.
Affordability is at its strongest level since late 2015 when property prices are compared to average incomes, Halifax said.
However, data published by the Royal Institute of Chartered Surveyors revealed that new buyer demand has fallen to the lowest level since 2023.
