After a disastrous fourth quarter at the end of last year, the UK housebuilders, which make up 50% of our PIN Fund (a fictional fund of property-related companies listed on the London Stock Exchange) fell by 5.3% on average in the first quarter of this year as concerns grew over higher stamp duty land tax rates, which were introduced on 1 April.

House price growth also stalled on a month-on-month basis in March, and the market is likely to be “a little soft” now that stamp duty discounts have become less generous, according to Nationwide Building Society, which recorded a 0.0% month-on-month average UK house price change in March, following a 0.4% monthly increase in February.

It said the annual rate of UK house price growth remained stable in March at 3.9%, a rate which was unchanged from February, and the average UK house price in March was £271,316.

Robert Gardner, Nationwide’s chief economist, added: “These price trends are unsurprising, given the end of the stamp duty holiday at the end of March.”

Could there be a Help to Buy revival?
The other five shares in our Fund did not return a loss (+0.1% on average) so the problem remains with the housebuilders and whether they can turn things around. One big boost would be a revival of the Help to Buy scheme, according to Barclays.

The investment bank suggested at the end of March that a revival of the Help to Buy scheme could lead to over 50% earnings growth and a boost in returns of more than 400 basis points within two years for housebuilders.

“We expect the sector to remain hostage to the ‘higher for longer’ rates environment over the remainder of the year, but sector valuations at a discount to long-term averages mean that we see scope for significant upside from an eventual recovery in volumes,” analysts Rajesh Patki and Emily Biddulph said in a note.