Will Berkeley Group Holdings PLC’s Share Price Outperform Persimmon plc, Taylor Wimpey plc, Bovis Homes Group plc And Barratt Developments Plc After Trading Update?

Does Berkeley Group Holdings PLC’s (LON:BKG) (LSE:BKG.L) share price have more investment appeal than those of Persimmon plc (LON:PSN) (LSE:PSN.L), Taylor Wimpey plc (LON:TW) (LSE:TW.L), Bovis Homes Group plc (LON:BVS) (LSE:BVS.L) and Barratt Developments Plc (LON:BDEV) (LSE:BDEV.L)?

Berkeley Group Holdings PLC
Berkeley Group Holdings PLC

Berkeley Group Holdings PLC’s (LON:BKG) (LSE:BKG.L) share price has gained 5.3% after the release of a trading update to the stock market. It states the housing market in London and the South East has now stabilised, which in my view bodes well for its long term share price potential. Underlying reservations in the 7 months since the Brexit referendum are down 16% on the comparable period last year. The last 2 months are ahead of last year.

The reduction in reservations is across all price points according to Berkeley’s update. It reflects the changes to stamp duty and mortgage interest deductibility as well as Brexit uncertainty. However, these risks have been offset partly by the continued availability of mortgage finance at low interest rates, favourable forex rates and Berkeley’s well-located homes.

Berkeley expects to deliver at least £3 billion in pretax profit over the 5 years ending April 2021. This could boost its share price performance in my opinion, with its shares up today due to its pretax profits now being expected to sit at the top of analysts’ expectations.

In 2017, Berkeley’s share price has gained 11.5%. This is behind the share price performance of other housebuilding stocks such as Persimmon plc (LON:PSN) (LSE:PSN.L), Taylor Wimpey plc (LON:TW) (LSE:TW.L), Bovis Homes Group plc (LON:BVS) (LSE:BVS.L) and Barratt Developments Plc (LON:BDEV) (LSE:BDEV.L). Bovis is up 12%, Persimmon has gained 18%, Barratt’s shares are 16% up and Taylor Wimpey’s share price is 26% firmer.

In my opinion, Berkeley’s share price could keep rising in the long run. I feel the lack of supply of housing in London will contribute to rising prices in the long run. I also think Berkeley has a good business model with relatively low financial leverage. I’m optimistic about the prospects for the sector and alongside Persimmon, Taylor Wimpey and Barratt, I feel Berkeley’s shares could perform relatively well in the long run.




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