Housebuilding shares have come under pressure ahead of the general election, although analysts at Goldman believe the sector should prosper whatever the outcome of Thursday’s poll.
At the moment, Taylor Wimpey is down 1.6p at 163.9, Persimmon is 21p lower at £16.70, Berkeley Group has fallen 10p to £25.22 and Crest Nicholson has slipped 7p to 441.2p.
But Goldman said:
Ahead of the general elections on May 7, we reiterate our view of limited risks for the housebuilding sector based on currently announced policies by the major parties. We view the cross-party commitment towards structurally increasing housing supply in the UK as supportive of our positive stance on the growth outlook for UK housebuilders. We believe estate agents are more vulnerable to the introduction of potential rent controls, and note that Berkeley group could be most impacted by the introduction of a ‘mansion’ tax, given approximately 15% of revenues are generated from properties worth more than the £2 mn threshold.
First quarter comments from companies suggest stable demand for newbuild into elections, while overall transactions remain subdued
We reiterate our preference for newbuild given the resilient growth outlook, and positive free cash flow generation outlook, which should support leading dividend payouts across the sector. As a reminder, we are buy rated on Taylor Wimpey (on Conviction List), Bovis Homes, Bellway, Crest Nicholson, and Redrow. We remain neutral rated on Countrywide, Foxtons.
