Investment bank Jefferies has recommended investors to 'Buy' shares in º£½ÇÊÓƵ housebuilders such as Persimmon and Taylor Wimpey, ahead of the upcoming Spring Statement this week.
Chancellor Rachel Reeves is scheduled to present her Spring Statement later this week. As she is committed to only one major fiscal event, it was initially intended as an update rather than a budget, as reported by .
However, significant policy updates are widely anticipated from the Chancellor's speech, potentially extending into housing policy.
"With frequent and recent reiterations of the government target to construct 1.5m homes over the term of parliament, we believe there is potential for further support for the housebuilding sector to be unveiled," stated Jefferies analysts in a research note today.
The previous year witnessed the lowest number of new homes built in a twelve-month period since 2017 (excluding the pandemic), with only 217,911 homes completed.
This figure contrasts with the government's average target of 300,000 homes per year to reach its 1.5m goal.
"At this stage we believe neither forecasts nor valuations include any upside from demand-side measures, and we would look to own º£½ÇÊÓƵ housebuilders into this event," said Jefferies analysts.
Jefferies currently rates every º£½ÇÊÓƵ-listed builder, including Persimmon and Taylor Wimpey either a Hold or Buy, while also rating infrastructure firms that focus on construction, like Balfour Beatty, a Buy.
Analysts have highlighted that the Help to Buy scheme peaked in the 2018-19 period, facilitating over 50,000 new-build home purchases.
The programme was then modified in 2021 to cater exclusively to first-time buyers and include regional pricing caps, which led to a reduction in plan-related purchases to around 30,000 homes.
According to the sector, Taylor Wimpey would stand to gain from any reintroduction of Help to Buy support measures announced in the Spring Statement.
"A key barrier for homebuyers is actually rooted in the very start of the process: property development," said Tony Hall, head of business development at Saffron for Intermediaries.
He suggested that standardizing planning processes across local councils could stimulate the housing industry by eliminating inconsistencies.
However, despite these potential benefits, Hall cautioned that current reports suggest it is "unlikely" there will be significant updates in the forthcoming Spring Statement.
Ratings for º£½ÇÊÓƵ housebuilders from Jefferies are as follows: Barratt Developments and Redrow have a 'Buy' rating; Bellway, Crest Nicholson, Persimmon, and Taylor Wimpey also receive a 'Buy'; while Berkeley Group, Vistry Group, and Watkin Jones are placed at 'Hold'.
