To Buy or Not to Buy: Adding Housebuilders to Your Share Portfolio

It would certainly seem like a good time to invest in housebuilders; with shares in the big names having all risen during 2021.

The pandemic changed the way people value their home and what they need it from it. This is reflected in the record high of the average house price, which now stands at £262,954 according to the Halifax.

The Government has introduced planning reforms to enable more homes to be built to meet its targets to reduce housing shortages. This means there is plenty of business to be had for the big housebuilders.

The largest housebuilding companies saw share prices increase by up to 32% (Vistry); 30% Crest Nicholson, 27% Redrow and 17% Bellway.

But it is not all plain sailing.  Along with demand comes problems with supply, exacerbated by the pandemic, and shortages of both materials and labour. However, many see the opportunities outweighing the obstacles. The rising cost of materials is also being offset by the increase in house prices.

When looking to invest in this sector, it would seem that a good national spread of housing stock and sites, as well as a strong balance sheet, are key to getting a good return. Barratt is rumoured to be paying a special dividend next year. Bellway is already included in trusts such as Aurora, Independent and Mercantile.

Despite some of the housebuilders practices and quality of product, it is fair to say that without them the Government will not be able to fulfil their policies. This, therefore, must make them a contender for your portfolio.

For further information, please contact Ed or Kelly on tel: 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk