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Is there value in housebuilder shares?

Shares in the sector have been marked down as investors fear a slump in sales volumes and prices ahead, but some housebuilders' valuations look compelling
Is there value in housebuilder shares?
  • Housebuilders are enjoying a sharp rise in demand thanks to stamp duty relief and help-to-buy
  • There is the risk of house price deflation and a drop in sales volumes next year
  • Sector still offers value opportunities

The UK’s housebuilders are riding the wave of demand that has ensued as buyers seek to take advantage of the stamp duty holiday and the current help-to-buy scheme ahead of the 31 March deadline. 

Persimmon (PSN) revealed that the average weekly private sales rate per site was 38 per cent higher than the prior year during the four months to November, meaning completions for the second half would be at least in line with the same period in 2019. A rise in net cash balances to £960m prompted management to recommend a second interim dividend of 70p a share, which together with September's 40p payment, amounts to the same level as the 2019 final return that was suspended upon the outbreak of the virus.    

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