After a terrible second quarter, when the five housebuilders in our UK PIN Fund (a fictional Fund of property related shares) fell by 9%, it was good to see them rebound in Q3, returning 10.1% on average.

Overall, the Fund, which consists of 10 companies, fell by 3% in Q2 but rebounded to return 4.5% in the third quarter of this year. Were it not for the two poorly performing self-storage firms in our Fund, then the overall return would have been 8.3% in Q3.

However, the housebuilding sector is certainly not out of the woods yet. In early September, Barratt Developments, one of the largest housebuilders in the UK, released its full year results, revealing that home completions fell by 3.9% and profit before tax was down by 16.2%. The company added that it expects market conditions to be ‘difficult’ in the coming months.

Commenting on the Barratt results, Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, commented: “Lower home completions combined with elevated build cost inflation have taken their toll on Barratt Developments and its peers. New home buyers are clearly exercising greater caution, and the outlook for the coming months is highly uncertain.

“Mortgage rates have increased significantly over the past year and have been highly volatile from one week to the next, making it very difficult for home buyers to plan their next move. First-time buyers have experienced even greater pressure, given the limited availability of high loan to value mortgages and the end of the Help to Buy scheme in England.

“Barratt is doing everything it can to weather the storm, reducing costs and stepping back from the land market. But like all housebuilders, it has limited control of its own destiny and needs market conditions to improve.”