Goldman Sachs: UK housing market stabilizes, ending bearish view on property stocks in the country.

Zhitong App has learned that Goldman Sachs has terminated its recommendation to short British real estate stocks, stating that the British real estate market is stabilizing and interest rates are expected to start declining from next summer. Strategists, including Sharon Bell, wrote in a report to clients, "The real estate market remains robust: house prices rose slightly last month, and there are encouraging signs that mortgage rates are starting to decline."

They have canceled their recommendation to short the industry and downgraded the ratings of European banks to neutral based on the interest rate outlook. The bank's economists predict that as inflation cools, the Bank of England will cut its key interest rate in August and then cut rates again for several consecutive quarters. Real estate has been severely affected by the impact of mortgage costs, the heavy debt burden in the industry, and the sharp drop in commercial real estate valuations as the economy weakens.

In June of this year, as part of its outlook for the second half of the year, Goldman Sachs gave a reduced rating to a basket of investments in the British real estate sector. Since then, the investment basket has risen by 11%, while the FTSE 350 Real Estate Investment Trust Index has risen by over 5%.

Data released today by the real estate sales portal Rightmove shows that British home sellers significantly reduced their asking prices in December, indicating a slow start to the market next year. However, due to a strong job market limiting the number of forced sales, the expected sharp drop in house prices in 2023 has not materialized.