Housebuilders have made an astonishing recovery in the past decade, ably assisted by Help to Buy, low interest rates and improved mortgage availability, not to mention a chronic shortage of houses. But is this cycle coming to an end?
The answer is probably no, although the criticisms about build quality (in some cases), excessive pay and premium pricing will probably not go away. Shareholders will continue to benefit from highly attractive dividend yields, but this is small recompense for the steady decline in share prices that took place in 2018. Because of this decline, valuations on a price/net asset value basis look considerably less stretched, but share prices are already discounting some unpleasant news that may or may not happen.