Could housing boom help build your pension?

As Government pledges 300,000 new homes a year . . .

IT hAs become a hot topic at dinner parties and barely a day passes when it’s not causing a stir in the house of Commons. But could Britain’ s housing shortage also hold the key to boosting your Isa or pension fund?

Ministers seem determined to build more homes. Chancellor Philip hammond has committed £44 billion to help deliver 300,000 homes a year over the next half a decade.

On top of that, an extra £10 billion has been committed to the help to Buy scheme, which offers interest-free Government loans to home buyers for up to 20 pc of a property’s value.

The construction drive led more than 11,500 new homes to be registered to be built in January — a 1 pc increase on a year ago, according to the National house Building Council. It says builders last year submitted the highest number of plans for new homes on record.

housebuilders are the most obvious type of company that should benefit and were among the best performing stocks in the FTse 100 in 2017.

since 2012, profits among Britain’s three biggest builders — Barratt Developments, Taylor Wimpey and Persimmon homes — have quadrupled to £2.2 billion a year. An estimated 40 pc of private sales are being funded by help to Buy deposits.

however, builders’ share prices dipped over the past six months, and now sit around 20 pc lower than last summer.

The industry’s profit margin is being stretched by the rising cost of materials and labour. The pressure to build faster and on less valuable sites is also taking its toll.

Last month, investors started selling shares in builders when luxury developer Berkeley said planning constraints and high costs had forced it to curtain the number of new projects it was launching.

But experts say the long-term prospects for housebuilders remain excellent.

Daniel Pereira, research analyst at investing firm square Mile, says: ‘There are some great managers who believe that builders are cheaply valued and have bright prospects.’

One is Neil Woodford, whose fund, Woodford equity Income, backs Taylor Wimpey, Countryside Properties and Barratt Developments, among others. Mr Woodford has struggled for returns lately, only turning £ 10,000 into £ 9,950 in the past three years, but Mr Pereira believes he can turn it around.

Currently, the fund puts £2.64 of every £100 into Taylor Wimpey, which sold 14,842 homes last year. That was 4.6 pc more than the year before and its average selling price was £264,000, up 3.5 pc. Profits fell by 5.8 pc after it set aside £130 million to help customers trapped in onerous leases drawn up by the house builder.

Mr Woodford also backs Forterra, which manufactures bricks and blocks at factories across the country. Forterra sells primarily to housebuilders and their merchants, contractors and specialist retailers. It’s the only maker of the original Fletton brick, a reddish-pink clay bar that’s nearly 150 years old and has been used to build a quarter of england’s houses. The fund invests around £ 1.20 in every £ 100 in Forterra. standard Life Investments UK equity Unconstrained has three housebuilders in its top ten holdings. Its largest is redrow, accounting for £4.60 of every £100. Bellway is one of its largest holdings, attracting £ 4.10 of every £100, while £3.60 in every £100 goes into Crest Nicholson. The fund has turned £10,000 into £15,550 in the past five years and is tipped by Jason hollands at investment firm Tilney. Building more homes will also benefit companies outside the big housebuilders. homeware retailers such as Dunelm Group should also get a boost.

It’s one of the top holdings in AXA Framlington UK Mid Cap.

Dunelm, which sells cushions, bedding and kitchen equipment, has its own manufacturing centre producing curtains, blinds and other accessories.

The AXA fund, tipped by Mr Pereira, invests £1.40 in every £100 in Dunelm and has turned £10,000 into £17,490 in the past five years.

Mr Pereira also likes Threadneedle UK equity, which backs trade kitchen company howden Joinery Group, investing around £1 of every £100.

howden was once the darling of UK fund managers but its popularity waned when its share price fell 25 pc in the aftermath of the Brexit vote. however, it has recovered, with the share price up 23 pc since then.

Threadneedle UK equity has turned £10,000 into £15,010 in the past five years.

Darius McDermott, of broker Chelsea Financial services, tips Franklin UK Mid Cap.

Its top holding is Britain’s biggest brick manufacturer, Ibstock Brick, which accounts for £4.38 in every £100. Over the past year the firm has invested in a new factory in Leicestershire with the ability to produce 100 million bricks a year.

Franklin UK Mid Cap has turned £10,000 into £16,980 in five years.