Persimmon, Taylor Wimpey and Barratt Developments have all claimed that demand for houses remains strong as they posted results last week.
The Share Centre currently recommends all three companies as a ‘hold’ and advises investors to remain vigilant as the Brexit story continues to unfold.
Investment research analyst Helal Miah says: “Persimmon was the first of the housebuilders to update the market last week, in which it stated that demand for houses has actually increased since the EU referendum last June with the forward sales book up 12 per cent on this point last year to £1.23bn. The group’s confidence was underlined by news that it has acquired a further 18,700 plots and opened 255 new development sites during the year.
“This positive trend continued into this week, in regards to Taylor Wimpey’s statement at least. The company, which is one of the biggest house builders in the country, noted that it was ‘unfazed’ by post-referendum uncertainty in the market, predicting that its profits will be at the higher end of analysts’ expectations. The average selling price of homes increased by 13 per cent to £286,000, and it ended the year in a strong position with more cash than last year, even after paying dividends.
Miah continues: “Barratt Developments was also keen to highlight that overall market conditions were healthy with strong demand for new homes, indeed total forward sales were up 15.8 per cent. However, the group’s heavy reliance on the London property market has presented some headwinds, in particular in regards to its full year targets with the group subsequently airing a cloud of concern.
“Despite the worthy forward looking prospects, good consumer confidence, mortgage availability and ongoing government support, there remains an air of uncertainty around the housebuilders.
He adds: “Investors interested in the sector will undoubtedly be more than aware that these companies suffered in the immediate aftermath of the Brexit vote back in June, and this led to the sector as a whole becoming more cautious. Indeed, the unknown impact from the Brexit negotiations will continue at least through 2017 and likely until the United Kingdom leaves the European Union, and this timeframe is uncertain.
“We would advise investors interested in the sector to keep their wits about them. Although housebuilders are still acquiring land banks and plots, companies as well as analysts remain vigilant, especially those with more of a London focus such as Barratt Developments.”