- Housebuilders are handy at keeping their balance sheets in check
- But they are still very cyclical stocks, and knowing what a recovery looks like is important
V, swoosh or bath? A somewhat enigmatic opening for an article on the UK housebuilders, perhaps, but all will become clear later. This sector is a perennial favourite for many investors for a basket of reasons. The housing market is relatively easy to understand, people can get their head around the key drivers and there is always a lot of commentary or media opinion on the sector. On top of that, this has been an industry from which investors have been able to make a very solid return.
Getting the timing right with what has long been a pretty predictable cycle has meant very comfortably double-digit capital growth in addition to, especially through the last decade, high dividend payments. In investment, however, we are (quite rightly) taught that we should never rely on the past to foretell the future. But after a pretty harsh 12-18 months for the sector’s share prices, and with the sector setting up for what would have historically been expected to be a sharp rebound, is now the right time to go back into the water?