Property and construction stocks have been among the underperformers on the Irish stock market this year, including the country’s largest private landlord, Ires Reit, which fell nearly 37 percent.
Home builders Glenveagh and Cairn Homes are also two of the biggest losers in 2022. Glenveagh is down 31 percent year to date, while Cairn is down 22 percent.
Real estate and construction stocks are down despite record rents, booming house prices and well-documented home demand.
All three of these companies, which are prominent in Dublin’s red-hot metropolitan housing market, have outperformed the Iseq 20 index of Ireland’s largest listed companies, which has fallen nearly 18 per cent this year.
This divergence reflects investor concerns about price, margin and volume in the sector, with demand potentially weakening due to higher interest rates and deteriorating economic conditions, analysts say.
Higher input costs due to inflation in material prices and wages have also challenged the sector, slowing housing starts after a strong start to the year.
Other underperforming stocks this year include building materials maker Kingspan and pharmaceutical company Uniphar.
However, bank stocks have bucked the broader market trend and moved dramatically in the opposite direction in 2022, especially since the European Central Bank began its rate-hiking cycle in July.
Bank of Ireland stock has soared 68 per cent, while AIB is not far behind with a 56 per cent gain for the year. Even sector laggard Permanent TSB is up more than 13 percent.
In contrast, the broader European banking sector is down almost 6 percent in 2022, a better performance than the broader market but still a decline in value.
Bank of Ireland shares have soared 68 percent, closely followed by AIB
Domestic Irish banks have not only benefited from a more benign interest rate environment, which will add more than £1bn to the sector over the next year.
All three remaining banks have acquired significant new revenue generating assets from Ulster and KBC, while 25 per cent market share is now up for grabs.
As non-bank lenders struggle with higher funding costs, banks are free to navigate a growing mortgage market.
Global stock prices have taken a tumble in 2022 as persistent inflation has prompted major central banks to aggressively raise interest rates, sparking a bear market in stocks and bonds alike.
But the underperformance of companies exclusively exposed to the Irish property market is something of a paradox as house prices and rents continue to rise at all-time highs.
Ires Reit’s sharp decline is particularly confusing given its pricing power and extremely tight supply, which has pushed rents up 14.1 percent this year, although cost inflation caused analysts to revise their forecasts for the stock earlier this year shorten
However, after an 18-month boom, new home construction has slowed significantly due to high construction costs and rising yields.
https://www.independent.ie/business/irish/property-shares-plunged-this-year-despite-housing-demand-42226034.html Real estate stocks have plummeted this year despite housing demand