At the time of writing, the FTSE 100 is today up 1% at 6,765 points, with shares in housebuilders Persimmon plc (LON:PSN) (PSN.L), Barratt Developments Plc (LON:BDEV) (BDEV.L) and Berkeley Group Holdings PLC (LON:BKG) (BKG.L) being among the biggest gainers in the index. The three stocks are all up by between 2% and 2.5%.
Of course, it has been a volatile period for the three housebuilders and the wider sector. Investors have become increasingly nervous about the prospects for the industry ahead of Brexit. I would therefore be unsurprised if there are further ups-and-downs for the share prices of all three companies in the near term.
Berkeley’s outlook may be hurt to a greater extent than some of its sector peers in my view. Its focus on the prime property market means that it may be more susceptible to the macroeconomic outlook than some of its peers. With the prospects for the UK and world economies being uncertain, foreign investment in London could decline to some degree, and this may reduce demand for its properties.
The company, though, appears to have a sound strategy to my mind. Its dividend prospects seem to be bright, while a P/E ratio of around 9 suggests to me that Berkeley could offer good value for money.
Persimmon’s net cash position suggests to me that it may offer a firm foundation for future growth. The company also has a significant land bank, and this may provide it with impressive financial prospects over future years.
With the Help to Buy scheme set to remain in place over the next few years and interest rates expected to stay low, I think that Persimmon could experience trading conditions that are stronger than the wider stock market is anticipating.
Barratt’s 8%+ dividend yield suggests to me that it may offer a margin of safety at the moment. The company’s share price has declined by 28% in the last 12 months, and it wouldn’t surprise me if further volatility is ahead as the Brexit process moves towards its conclusion.
With there being a lack of supply compared to demand for new homes, I think the company may enjoy a tailwind over future years. With population growth forecast to be above newbuild property completions, I think that Barratt’s long-term financial prospects could be relatively bright.