3 housebuilding stocks to buy amid surging housing market

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3 housebuilding stocks to buy amid surging housing market

 3 housebuilding stocks to buy amid surging housing market
Image source: Nopparat Khokthong, Shutterstock.com

Highlights

  • The average house price in the UK rose by 11.8% to a record high of £270,000 in the first nine months of 2021, as per the latest data released by the ONS.
  • Sustainable high demand from consumers is beneficial to the housing sector and boosts housebuilding companies revenue and profits.

The average house prices in the UK rose by 11.8% to a record high of £270,000 in the first nine months of 2021, as per the latest data released by the Office for National Statistics (ONS). The house price rose by £7,000 in September 2021 alone, which was the last month before the end of the stamp duty holiday as homebuyers rushed to complete the buying deals to get the advantage of stamp duty holiday.

The Stamp duty holiday was one of the primary reasons for the UK housing market boom in the last one year. The UK government introduced a tax break to support the sector after the Covid-19 pandemic and revive the economic growth. Hence, the consumers rushed to take the benefit leading to high demand for houses. Also, the UK government extended the stamp duty holiday period thrice till 30 September 2021. The other reason for the surge in price was the need for large properties amid lockdown and work from home situations. However, the significant rise in average housing prices in a short period of time has resulted in negligible savings for homebuyers.

As per the market experts, the housing prices will not decline immediately after the end of the stamp duty holiday as the housing market currently has a greater number of buyers who are chasing fewer properties available in the market, hence supporting the prices. Also, the record low mortgage rates are encouraging homebuyers.

Housebuilding stocks to buy

© 2021 Kalkine Media

Let us look at FTSE listed housebuilding stocks that might be good for long term investment:

Persimmon Plc (LON: PSN)

FTSE100 listed company is engaged in the construction of the family house, executive housing, and social housing in the UK. It sells its inventory under various brand names. The company, in its recent business update, reported robust demand for the new houses. Also, it expects to construct and deliver 10% more completed houses to its buyers. The company’s forward sales stand at £1.15 billion for the period between 1 July 2021 to 8 November 2021. The company has a positive outlook and expects solid growth in upcoming quarters due to strong underlying fundamentals supporting the housing market.

Persimmon Plc current market cap is £8,641.2 million, while its current dividend yield stands at 8.7% as of 17 November 2021.

Taylor Wimpey Plc (LON: TW.)

The company operates as a housebuilder in the UK and Spain market offering small apartments to six-bedroom homes. The company reported good consumer demand for new houses in the second half of 2021. It has 148k potential plots and added 5,431 new plots in October 2021. The company’s total order book stood at £2.8 billion as of 8 November 2021.

Taylor Wimpey Plc current market cap is £5,721.5 million, while its current dividend yield stands at 5.3% as of 17 November 2021.

Bellway Plc (LON: BWY)

FTSE250 listed company build residential apartments of different sizes. It operates under the brand name Ashberry and Bellway. The company reported a 40.3% rise in revenue at £3,122.5 million, while its gross profit was £651.9 million for the financial year ended 31 July 2021. The company aims to deliver close to 11,100 homes to its buyer by the end of the next financial year, while its forward order book stands at £1,966.3 million as of 3 October 2021.

Bellway Plc current market cap is £3,908.10 million, while its current dividend yield stands at 3.7% as of 17 November 2021.

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