Bellway (BLWY) & Persimmon (PSN): 2 homebuilder stocks to buy now

Highlights 

  • UK property prices rose by 1.8 per cent to £5,983 this month, the highest rise since October 2015, as per Rightmove.
  • Rightmove has said that the housing market is currently in a full house market condition as all regions and property sectors are hitting price records.

UK’s housing prices rose by 1.8 per cent in October on a year-on-year basis, thereby making it the highest rise for any October since October 2015, according to the online real estate portal Rightmove.

According to Rightmove, the property market is in a full house market for the first time since March 2007, as every region and property sector were touching price records. The average housing price stood at £5,983 this October.

A full house market condition is considered a rare occurrence. As per Rightmove, the market was being supported by strong fundamentals and buyers’ keenness to purchase homes before a possible interest rate hike by the BoE.

The above factors have helped the robust housing market activity, despite the UK’s stamp duty holiday ending in September.

Thus, let us take a look at 2 FTSE listed stocks in the housebuilder sector and their investment prospects:

  1. Bellway PLC (LON: BWY)

FTSE 250 index listed firm Bellway is a UK based residential property developer and housebuilder.

The company reported its FY 2021 results on Tuesday, its FY 2021 revenue jumped by 40.3 per cent to £3,122.5 million, compared to £2,225.4 million in FY 2020.

Also, its FY 2021 revenues was just 2.8 per cent below its record of £3,213.2 million in FY 2019

The group’s housing completions in FY 2021 increased by 34.8 per cent to 10,138, compared to 7,522 in FY 2020 and 10,892 in FY 2019.

The strong results were attributed to good market conditions and to a robust balance sheet. The company’s proposed total dividend also increased by 135 per cent to 117.5 pence per share, compared to 50 pence per share in FY 2020.

The company, however highlighted the UK’s supply chain issues are impacting its construction activity. Bellway expects its H1 2022 construction levels to remain similar to H1 2021.

Bellway’s share price and volume

(Image source: Refinitiv)

Bellway’s shares were trading at GBX 3,398.00, up by 1.37 per cent on 19 October 2021 at 10:15 AM BST. While the FTSE 250 index was at 23,026.88, up by 0.25 per cent

The company’s market cap stood at £4,136.36 million, and its one-year return is at 30.51 per cent as of 19 October 2021.

  1. Persimmon PLC (LON: PSN)

FTSE 100 index listed firm Persimmon is a British homebuilding company, with its headquarters located in York.

The company’s H1 2021 revenues stood at £1.84 billion, compared to £1.19 billion in H1 2020. Also, its home completions were 7,406, up from 4,900 in H1 2020.

The group declared a dividend of 235 pence per share in H1 2021, compared to 110 pence per share in H1 2020.

Persimmon’s share price and volume

(Image source: Refinitiv)

Persimmon’s shares were trading at GBX 2,646.00, down by 0.41 per cent on 19 October 2021 at 10:27 AM BST. Comparatively, the FTSE 100 index was at 7,206.21, up by 0.03 per cent.

The company’s market cap stood at £8,478.49 million, and its one-year return is at 5.45 per cent as of 19 October 2021.

Bottom Line

The boom in the housing sector is due to greater demand than supply of new housing stock in the property market, especially amidst robust wages and low-interest rates.

Meanwhile, a UK housebuilding trade body formed by Lloyds Banking Group and Homes England has received £300 million in funding from the government to offer capital support to regional housebuilders and ensure work in the construction sector.

The move will support the UK government’s plans to build 300,000 homes each year and offset rising raw materials and other expenses for housebuilders.

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