Lens On 3 FTSE 250 Housebuilding Stocks as House Prices See A Boom Outside London

Sumamary

• The average asking price of homes has jumped by £5,767, or 1.8% month-on-month to £333,564.
• The boom is being witnessed as sellers seek to make the best of an extended tax break on property sales.
• House prices in Wales rose by as high as 13% while in London a meagre 0.2% from last year.

Continuing the trend of rising property prices in the UK, the average asking price of homes has jumped by £5,767, or 1.8 per cent month-on-month basis in May to £333,564, according to the listing’s website Rightmove Plc (LON:RMV). The boom in house prices began last year and is maintaining the momentum into 2021 as well.

The boom is being witnessed as sellers seek to make the best of an extended tax break on property sales announced during the budget. However, the overall rise in prices is marked by a stark difference in local prices. The national rise has just covered the big regional differences, house prices in Wales rose by as high as 13 per cent, and much of northern England too saw a double-digit rise in prices, while London saw a meagre 0.2 per cent rise during the month as compared to last year.

The stamp duty holiday was introduced last summer which has led to the surge in the housing market, though it would be gradually phased out in Northern Ireland in two stages beginning June-end. The present starting threshold of £500,000 would drop to £250,000, except for first-time buyers, at the time of phase out. To spur that demand, the government announced a cut in tax for purchases.

Property prices saw an initial slump during the first national lockdown last year in April and May. Since then, prices have picked up sharply as the rich have bought bigger houses to suit the new work-from-home requirements.

Tim Bannister, director of property data at Rightmove said that the mini boom witnessed last year is playing well into 2021 as market activity, and new price have again upturned predictions.

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Here is a look at three FTSE 250 housebuilding stocks with over 35 per cent one-year return and their reaction to the news:

St Modwen Properties Plc (LON:SMP)

The property development and investment business company’s shares were up 0.19 per cent at GBX 534 on 17 May at 08:12 GMT+1. It has given a one-year return of 64.36 per cent. Meanwhile, the FTSE 250 was up 0.22 per cent at 22,384.32.

(Source: Refinitiv, Thomson Reuters)

The company’s total net rental income fell to £31.2 million for the year ended 30 November 2020 compared to £40.1 million a year ago. It reported a loss of £120.8 million compared to a profit of £49.5 million a year ago. The company reported strong operational performance notwithstanding the Covid-19 disruption. It had a clear focus on the two sectors of housebuilding and logistics, with long-term growth trends, substantial pipelines, and scalable platforms.

Also read: Which Housing Stocks are in Focus in The UK these Days?

Sirius Real Estate (LON:SRE)

The property company’s shares were marginally up 0.10 per cent at GBX 96.1 on 17 May at 08:23 GMT+1. The shares have given a one-year return of 36.80 per cent.

(Source: Refinitiv, Thomson Reuters)

For the year up to 31 March 2021, the company reported a 7.6 per cent growth in its total annualised rent roll to €97.2 million from €90.3 million a year ago. It was seventh year in a row when the company registered over 5 per cent growth in like for like rent roll and recorded a 5.2 per cent increase to €94.3 million from €89.6million a year ago.

CLS Holdings Plc (LON:CLI)

The commercial property investment company’s shares were up 0.83 per cent, trading at GBX 244 on 17 May at 08:25 GMT+1. The shares have given a one-year return of 35.67 per cent

(Source: Refinitiv, Thomson Reuters)

The company collected 98 per cent of pending rents for the January-April quarter of 2021, compared to a 99 per cent collection seen last year. Though it was an increase of 8 per cent since the company’s 14 January trading update. The company had cash of more than £185 million and an additional £50 million in undrawn facilities as of 31 March 2021.