Conditions across the UK housing and construction markets remained subdued in August and September, keeping pressure on DIY and home improvement retailers, according to a new sector note from Citi.
The broker said consumer spending on DIY and home improvement turned modestly positive in September, rising 1.2% year on year according to Barclaycard data, but noted that growth had been in negative territory for most of the year.
Housing demand weakened sequentially as mortgage rates rose, continuing to suppress transaction volumes and weighing on the outlook for home improvement spending.
House prices edged higher in the period, but forward-looking indicators from the RICS survey of estate agents pointed to soft expectations for both prices and sales activity ahead.
Overall construction output was weaker, though repair, maintenance and improvement work appeared to be growing year on year and improving through the period, with housing starts also beginning to rise.
Citi said the government's First Homes Scheme, announced on 26 September, should provide some support to the sector, but said the industry is waiting for further detail on scope and timing at the Budget on 28 October.
The broker said the Budget will be a key focus for investors in DIY and building materials stocks.
