Fears that the housing market may be seriously damaged by the worsening economy led to share price falls for Rightmove and others yesterday.
The drop - of over four per cent in the case of Rightmove - followed the release of the latest economic data from the government’s Office for National Statistics.
The figures showed that UK employees saw their wage rises wiped out by surging inflation late last year: weekly earnings - excluding bonuses - rose by 3.8 per cent in the past year, while inflation is now at a 30 year high level of 5.4 per cent.
The ONS forecasts that inflation is likely to hit around 6.0 per cent by April, the highest figure for a decade - and coinciding with the lifting of the government’s energy price cap, which some suggest may trigger substantial domestic fuel bill rises.
Analysts suggested that Rightmove was amongst the sharpest fallers on the London Stock Exchange because of worries about the economy’s impact on the housing market in the light of predicted interest rate rises later this year.
Susannah Streeter, senior investment and markets analyst at business consultancy Hargreaves Lansdown, says: ‘’The financial and labour markets have batted away Omicron like an annoying fly, but worries are increasing that inflationary pressures combined with an income squeeze could come with a painful sting.
“The effect of workers’ search for higher pay is filtering through to wage growth, but the rises aren’t keeping pace with inflation. It’s a problem already buzzing in the ears of Bank of England policymakers, as they decide when and how quickly to raise rates to try and keep a lid on price rises.”
The latest survey of 6,000 clients of Hargreaves Lansdown, selected at random, shows that 78 per cent expect another BoE interest rate rise imminently, and more broadly there has been a two per cent drop in confidence in UK economic growth among investors.
“Rightmove was one of the biggest fallers as worries resurface that it the beginning of the end of the red hot housing market could be in sight” says the company’s analysis.
Agency industry fallers yesterday included:
Rightmove down 4.2 per cent;
Purplebricks down 2.9 per cent;
LSL Property Services down 1.7 per cent;
Winkworth down 1.5 per cent;
Savills down 0.6 per cent;
Foxtons down 0.4 per cent.