HOUSEBUILDERS IN NEGATIVE TERRITORY
London-listed housebuilders are almost exclusively focused on the UK and their share prices are heavily tied to what happens with the Brexit process.
The relief offered by a successful deal with the EU would not fully solve the issues they face, even if that could provide a sentimentdriven boost to housebuilding stocks.
The industry faces an unhelpful combination of flat or falling house prices, partly driven by economic uncertainty but also a consequence of the regulatory impact on the buy-to-let space.
Furthermore, rising costs are weighing on the sector including labour as the availability of workers is likely to be affected by whatever form the UK’s exit from the EU takes.
Some housebuilders are trading on doubledigit dividend yields which is typically a sign that the market doesn’t believe the dividend or earnings forecasts.
However, some experts believe now is a good time to reappraise the sector following significant share price declines this year.
For example, the managers of Standard Life Investments UK Equity Unconstrained (B79X967) and Mercantile Investment Trust (MRC) both highlight Bellway (BWY) as an undervalued opportunity. Wesley McCoy from Standard Life describes it ‘one of the best operators in the market’. (TS)