header
search-icon
mobile-menu-icon search-icon

RESEARCH

Clients can browse and search the Peel Hunt research library and archive.

TRADING

A tool for our clients to submit and manage orders with Peel Hunt. 

REGISTER FOR OUR RESEARCH PORTAL

Thank you, your registration has been received.
We will be in contact with you shortly.

I'm interested in (tick all that apply)

SEARCH

PEOPLE
SERVICES
NEWS

Advisory and broking services to UK mid & small-cap companies

Comprehensive coverage of over 300 companies

Investment ideas and execution for institutional investors

Complete UK pricing coverage and worldwide access

Insight Image

The February/March results season did little to change our bullish view on the UK new housing market. It also did little to shake our more cautious view on transactions in the second-hand housing market. News flow from the housebuilders has been consistently robust, while the estate agents have been struggling with softer volumes. The Housebuilders' share prices are down 7% ytd, while the Estate Agents' share prices are off 10% ytd on average.

Increasing the supply of new homes, which in turn improves affordability, especially for younger buyers, is a core policy for the current Government. As a result, we expect HTB to continue well into the future (albeit with some limits imposed) while the Letwin review and final housing white paper will continue to increase land supply and hopefully address some of the labour and materials issues. Leaseholds and ground rents remain harder to call, but again our core stance is that we don’t see new policies damaging housing supply to any real extent.

Our forecasts see the housebuilders delivering an average 7.2% dividend yield per annum over the 2018-20 period combined with a 9.6% annual growth in NAV per share. Balance sheets remain in very good shape and there is limited pressure on costs (especially land). We forecast three-year revenue CAGR of c4%, 6% in EBIT and 8% in NAV per share.

After a difficult 2017, where transactions volumes were lower and commission rates remained under pressure, the traditional agents have seen no let-up in 2018. Sales pipelines are down on the prior year and there are no signs of or likely catalysts for a near-term pick-up in activity. While sales transaction comparatives begin to ease through the second half, the sector is faced with the threat of losing a material proportion of income/profit when the lettings fee ban comes into force in 2019. The outlook remains challenging.

To view the video please click here

To requests access to Peel Hunt's latest sector report, “House Rules IV”, on the UK Housebuilders and Estate Agents please click here