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UK housebuilders – when the taps run dry

Without government-provided stimulus, can the housebuilders keep delivering for their shareholders?
UK housebuilders – when the taps run dry
  • The government’s help to buy scheme has propped up the housebuilding sector for a decade 
  • The stamp duty holiday has been seen as the major driver behind housing market strength in 2021

For almost a decade the UK’s quoted housebuilders have benefited from generous government housing policy, in particular Help to Buy (HTB) boosting new housing demand and, more recently, cuts in Stamp Duty (SDLT) that have driven up the wider market. Higher demand has pushed house prices up, leading to stronger margins, high profit growth, strong free cash flow and generous dividends from the sector.

As these positive, external factors come to an end, what does this mean for investment in the sector? HTB is already winding down, SDLT fully returns this autumn and other headwinds are forming. The housebuilders certainly face tougher trading, so should investors be wary of this sector? Not necessarily.

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