The house-building market in the United Kingdom has been generally slow in 2018 amidst the macroeconomic instability at home and worldwide. However, it has also reportedly endured the ongoing blows caused by the political disorder and Brexit irresolution probably because of the positive sentiment building around the belief that a hard or no-deal Brexit will still be avoided by the parliament. The investors in the stock market were also encouraged by many factors including Bank of America’s Merrill Lynch’s announcement that the risks were priced in. The trend started to look better in 2019.
A survey conducted by RICS UK exhibits weakening of sales as demand and supply both have been falling. As a result, the house prices have been falling with other contributing factors being limited property options for the buyers. So far, the housing sector has managed yet there is pessimism building until a concise way forward is presented to the stakeholders and the investors. As of now, the house builders are sceptical of investing in long term projects based on mere assumptions.
Since the advent of 2019, the British house-building companies, FTSE 100 listed Persimmon and FTSE 250 listed Bovis Home, have reported upward movement in their stock market performance. In the last week closing January 18, both the firms announced profits ahead of market consensus. Likewise, the mid-cap FTSE 250 listed Barratt Developments, the FTSE 100 listed Berkeley Group Holdings and giant Taylor Wimpey have also supported the house-building market to be lucrative throughout 2019. The investor sentiment is perhaps being pushed ahead by the government’s help to buy scheme which encompasses privileges like shared ownership wherein one can buy as small as 25% or as much as 75% of a home and pay rental on the rest. This has specifically provided a great platform for first-time buyers.
On January 22, Persimmon Plc (PSN.L) was trading high at 2,393.70 by midday, Bovis Homes Group Plc (BVS.L) at 991.8, Taylor Wimpey Plc (TW.L) was also up at 166.60 and Berkeley Group Holdings Plc (BKGH.L) at 3800 after hitting a month high of 3813 at the closing of last week.
With so many factors fluctuating in the background, there is still uncertainty for the future of house-building in UK. The short-term upswing in the stock market or inferences from previous years cannot be considered for a long-term outlook since Brexit resolution is just around the corner. Perhaps, high employment rate and cheap money have helped the UK housing market to bear the Brexit jitters, the situation could change. For instance, if the loss of confidence in the current parliament leads to the opposition Labour party coming into power, the state might be able to compulsorily purchase sites at knockdown rates.
Nevertheless, unlike other sectors, house-builders are operating in a less volatile market and can also control the supply of houses from land banks. Further, most are accumulating profits than debts. Thus, the investors can stay attentive and encash the opportunities in the housebuilding market while they last.
With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities.
Amidst this, are you getting worried about these falling interest rates and wondering where to put your money?
Well! Team Kalkine has a solution for you. You still can earn a relatively stable income by putting money in the dividend-paying stocks.
We think it is the perfect time when you should start accumulating selective dividend stocks to beat the low-interest rates, while we provide a tailored offering in view of valuable stock opportunities and any dividend cut backs to be considered amid scenarios including a prolonged market meltdown.