The second quarter of 2025 was characterised by US president Donald Trump’s ‘Liberation Day’ on 2 April, which introduced a surge of tariff charges, shaking financial markets globally.

Top five companies with the highest total returns in Q2
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The tariffs varied for different industries globally, but the impact on the UK, with a rate of 10%, was minimal compared with the likes of China.

UK property stocks remained resilient amid this volatility and were up 12% by the end of Q2, compared with the prior quarter, according to Property Week’s analysis of 30 property companies across the FTSE 100 and FTSE 250, based on London Stock Exchange Group data.

Oli Creasey, head of property research at Quilter Cheviot, says: “Some investors might be tired of the emotional swings that come with high-growth global businesses dealing with tariffs, borders and geopolitics. REITs offer something simpler – you own property, you get rent and it’s relatively stable. That simplicity may be appealing again.”

The residential sector was a particular haven from tariff-related volatility, with share prices up across all the housebuilders on a quarterly basis in Q2. This followed a fall in bond yields and swap rates, leading to lower mortgage rates and a competitive market.

So, while Trump’s tariffs have rocked markets globally, the bigger story for property is what’s happening in the bond markets, which has more of an impact on valuations and debt costs.

Aynsley Lammin, equity analyst for building and construction at Investec, says: “The sector benefited from a sweet spot where swap rates and bond yields fell because markets were worried about global growth and potential recession risks, especially due to the US-China tariff drama, but the UK wasn’t viewed as being directly affected.”

The sector benefited from a sweet spot where swap rates and bond yields fell
Aynsley Lammin, Investec

The residential sector’s biggest costs are land and labour, which do not rely heavily on imports from the US. Materials such as glass and plasterboard are produced domestically, so the industry was relatively insulated.

Lammin adds: “The spring selling season held up reasonably well and trading updates from names like Barratt Redrow and Vistry were solid.”

However, share prices are now almost back to where they were at the start of Q2. Lammin observes a “more cautious tone” in trading updates. For example, in July, Barratt Redrow’s results for the first six months of the year revealed that its home completions had fallen 8% to 16,565, below its target of 16,800.

Lammin says: “Planning continues to be a bottleneck. It’s not opening up as quickly as hoped. Also, the planning process takes time. Even when permission is granted, getting the site up and running and delivering units takes another six to 12 months.”

However, in a trading update on 10 June, housebuilder Bellway said it was “well positioned” to achieve 20% volume growth over the next two years, following “robust” trading throughout the spring season.

The housebuilder has contracted to buy 6,759 plots since the start of last August, up from 3,906 between 1 August 2023 and 2 June 2024. Bellway outperformed its housebuilder peers during Q2 in terms of share price, up 22% on a quarterly basis, followed by Vistry (13%), Taylor Wimpey (10%), Barratt Redrow and Berkeley (both up 8%). Bellway also had the highest total return among the housebuilders, at 23%.

Share price movements for our sample of 30 leading property FTSE 100/250 companies
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On a yearly basis, Vistry’s share price fell the furthest, down 46%, after issuing three profit warnings since Q2 2024 due to build-cost miscalculations. On 10 July, its results revealed a 33.7% drop in pre-tax profits for the first half of the year because of these miscalculations.

Lammin says: “The general message has been that trading [across all of the main housebuilders] has become soggier since late May, and the outlook for H2 is more subdued than expected. There’s been a sell-off, even though Q2 was relatively decent on paper.”

Meanwhile, build-cost inflation remained relatively muted in Q2, averaging around 2%. Lammin says: “Labour costs are slightly higher, but overall, there’s plenty of capacity in the industry, so material price pressure has been limited.”

In June, Halifax reported house price growth was flat, compared with a 0.3% dip in May.

Nicholas Finn, managing director of Garrington Property Finders, says: “At a national level, the forces of supply and demand cancelled each other out. The price of the average UK home failed to budge in June.”

He says that in many areas, the number of homes coming on to the market far exceeds the number of potential buyers, which “is keeping price rises to a minimum or even pushing prices down”.

Similarly, Lammin adds: “We’re not seeing meaningful movement on house prices. So, while cost inflation isn’t spooking developers, they’re still having to offer selling incentives and there’s no real underlying house price inflation to support margins.”

Biggest quarterly gainers

Across all 30 companies in the Property Week sample, the biggest quarterly share price gainers were PPHE Hotel Group (34%), Shaftesbury Capital (25%), Bellway (22%), Great Portland Estates (21%), Hammerson (21%) and Empiric Student Property (21%).

During Q2, PPHE Hotel Group published a trading update for Q1 that revealed like-for-like occupancy levels of 70.5%, up 10 basis points from the same point in the year prior. The group opened art’otel Rome Piazza Sallustio in Q1 and reported increasing levels of guest demand.

The group also said the performance of the art’otel London Hoxton continued to improve, supported by increasing corporate demand and bookings for meetings and events.

SEGRO is possibly ‘too big to buy’. That might partly explain why it’s underperforming
Oli Creasey, Quilter Cheviot

Meanwhile, the companies with the weakest share price performances over the quarter were SEGRO (-2%), Workspace Group (1%), British Land (2%), Savills (4%) and Unite Group (4%), with SEGRO being the only one to register an actual decline.

SEGRO also posted a -2% total Q2 return – the lowest of all the companies. The group has strong fundamentals so the reason for this is not clear, but it is noteworthy that it has the biggest market cap of all companies in the sample.

Creasey says: “I do think SEGRO is possibly ‘too big to buy’. That might partly explain why it’s underperforming relative to others. Obviously, a big firm [like Blackstone, Brookfield or KKR] could afford to buy SEGRO – but it would be a major acquisition. In practice, there are far fewer buyers for a REIT of that size [SEGRO’s market cap is around £9bn] compared with a £1bn company.”

In contrast, companies with smaller market caps, including takeover targets Assura, Warehouse REIT and Urban Logistics, performed strongly in Q2 in terms of quarterly and yearly share price increases as well as total shareholder returns.

Other companies with small to mid-size market caps that performed well in Q2 include Supermarket Income REIT, PPHE Hotel Group, Great Portland Estates and Empiric.

Creasey says that while he doesn’t want “to start speculating too much” on mergers and acquisitions, “it’s clear that companies in that mid-cap space are more likely to be on someone’s radar”. He adds: “Many of the recent deals we’ve seen have been REITs acquiring smaller REITs. When you’re the biggest, there are just fewer people above you who can realistically make that move.”

Soumen Das, chief financial officer at SEGRO, said: “I think what we’ve seen over the last 12 months is the smaller REITs being picked off in takeover deals. We’re the largest and most liquid stock in the sector, so investors can easily rotate money out of us and into special situations.”

He added: “Trying to explain share price performance in a short window is tough. But with around a dozen M&A deals in the last year that trend is real. So yes, I think that dynamic has impacted us.”

Listings hit a low as LSE struggles

Top five biggest share price fallers Q2 2025 vs Q2 2024
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Data from Dealogic shows there were just five initial public offerings (IPOs) on the London Stock Exchange (LSE) in the first six months of 2025, raising a total of £160m – the lowest level in three decades.

The LSE has lost big, attractive stocks in recent years, such as Ferguson (formerly Wolseley), CRH and Kingspan. Many firms have migrated to the US market, driven by higher valuations, as well as greater access to liquidity and to deeper capital markets. The London market is also having trouble attracting new listings.

According to the Financial Times, the London Stock Exchange Group is considering the launch of 24-hour trading to make the UK market more competitive and attractive to investors.