UK homebuilder stocks have finally gotten some reprieve after trading updates reassured investors that a property market downturn in Britain may be priced in.
(Bloomberg) — UK homebuilder stocks have finally gotten some reprieve after trading updates reassured investors that a property market downturn in Britain may be priced in.
A FTSE index tracking housebuilders has rallied 15% in two weeks, outperforming the broader market’s rally, even as Persimmon Plc, Taylor Wimpey Plc and Barratt Developments Plc reported a further slump in sales toward the end of 2022.
“The year closed no worse than anyone thought,” Liberum analyst Charlie Campbell said by phone. Builders also seem to be choosing to protect prices over volumes, benefiting profits, he noted.
Taylor Wimpey said Friday that “selling price discipline” had benefited its operating margin. Its shares were up 0.3% as of 12:17 p.m., taking year-to-date gains to 11%.
“This is the stock market deciding that it’s not going to be as bad as our worst fears,” said Campbell.
The homebuilder benchmark plunged a record 44% in 2022 as Britain’s cost-of-living crisis and rising interest rates were seen crippling demand, while firms grapple with rising costs for materials. The sector remains historically cheap even after the partial recovery, trading at around 10 times earnings expected a year from now. That’s down from a 2020 high of 17 times.
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