Lens on Barratt Developments and Bellway as UK house prices hit a record high in June

Summary

  • The UK housing prices recorded a new high in June for the third consecutive month.
  • The average UK price rose by 0.8% in June compared to the surge of 1.8% in May 2021.

UK house prices surged to make a new high of £336,073 in June for the third consecutive month. However, the prices showed a sign of cooling down and increased at a slower pace compared to the rise of last month, as per the data released by the UK’s number one property website, Rightmove.

In June, the average UK price rose by 0.8% on a month-on-month basis, an increase of £2,509, to a new record of £336,073 compared to a rise of 1.8% reported in May.

The UK’s housebuilding sector has been growing steadily since the first national lockdown came to an end. Since March 2020, the prices rose at an average of £67,394 for high-end properties, reporting a 12.3% increase, compared to a rise of 7.5% for all property prices.

As per Tim Bannister, Rightmove’s Director, the growth seems to slow down a bit as some of the demand has now been met; however, he is still optimistic about the demand prospects as the website is facing high traffic due to the extended stamp duty holiday, which was originally set to end in March 2021, and now extended till June 2021.

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Let us take a look at 2 major stocks from the housebuilding sector which have been benefitting from the price boom:

Barratt Developments Plc (LON: BDEV)

An FTSE100 constituent, Barratt is one of the largest residential property developers in the UK. The company offers property across the UK through its three consumer brands, Barratt Homes, Barratt London, and David Wilson.

The company was the highest-scoring national housebuilder in 2020, as declared by the NextGeneration Sustainability Benchmark Report. As per the company’s trading update released on 6 May 2021 for the period from 1 January 2021 to 2 May 2021:

  • The company’s fully forward sale for FY21, along with total forward sales including Joint Ventures (JV), for the period, stood at £3,696.3 million compared to £2,834.0 million as of 3 May 2020.
  • Average Homes built per week in the period was reported at an average of 321 equivalent homes, including JVs.

On 21 June 2021, Barratt’s shares were trading at GBX 703.80 as of 09:10 GMT +1, down by 0.57%. The stock has given a return of over 38% in the last one year.

Bellway Plc (LON: BWY)

Founded in 1946, Bellway has been building homes for more than 75 years. The company operates in 19 trading divisions across England, Scotland and Wales and sold 10,892 homes in 2019.

As per the company’s trading update released on 15 June 2021, for the period of 1 February to 6 June 2021:

  • The company had an average of 239 reservations per week, reporting a 51.3% increase when compared to 158 per week for a similar reporting period in 2020, primarily due to strong sales demand.
  • The company’s order book increased by 20.5% to £1,889 million compared to £1,568 million as of 31 May 2020.

On 21 June 2021, Bellway’s shares were trading at GBX 3364.00 as of 09:11 GMT +1, down by 0.15%. The stock has given a return of over 26% in the last one year.


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