A risky play on the housebuilders

The housebuilder rally is built on sand, but it’s good for a short-term punt, says Phil Oakley

Apart from the buoyant London market, which has attracted a lot of foreign money, Britain's housing market is a tough place to be. Houses remain unaffordable for many would-be buyers, and it's still hard to get a mortgage unless you have a large deposit.

You'd think this would have made life difficult for Britain's housebuilders. But it hasn't. The profits and share prices of the quoted sector are soaring, largely as a result of massive government subsidies. I hadn't expected our politicians to be quite as relentless in their support for the sector and, as a result, have been much too cautious on it. But for how long can profits and share prices keep going up? Is there still time to jump on board?

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Persimmon1,194p+140%17.102.0712.08%22.00%22.93%
Barratt Dev320p+180%22.861.486.48%15.10%60.00%
Taylor Wimpey98p+143%16.901.609.45%8.80%31.03%
Berkeley Group2,127p+77%14.792.3315.73%17.80%19.68%
Bellway1,288p+85%15.241.348.82%16.10%25.92%
Bovis765p+92%19.171.357.04%12.00%34.84%
Crest Nicholson349pN/a14.191.9613.82%19.30%18.70%
Redrow224p+105%18.671.457.74%14.60%36.67%

Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.