Budget Boosts Homebuilder Stocks

Concerns are being raised about the possibility of a UK housing bubble due to measures in the Budget, but investors are looking at stocks in the housebuilder sector

J.P. Morgan Asset Management 25 March, 2014 | 11:30AM

This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Guy Anderson, Fund Manager, The Mercantile Investment Trust and Jonathan Ingram, Fund Manager, JPM UK Dynamic Fund confirm why they are sticking with the housebuilders.

Recently release government figures show that more than 17,000 households bought homes under the Help to Buy scheme in its first nine months. They also showed that 88% of the 17,395 were first-time buyers. Clearly Prime Minister David Cameron’s scheme to support the housing market is working, in the sense that it is providing opportunity to aspiring homeowners.  While concerns are being raised about the possibility of a UK housing bubble, investors are also looking at stocks in the housebuilder sector to determine whether they still present a compelling opportunity. 

We are seeing strong performance of the house builders against a backdrop of a recovering UK economy – this is a cyclical sector, after all. That said, and despite where we are in valuations relative to earlier in the cycle, we think there is additional room for further outperformance. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Countrywide PLC4.49 EUR-0.53
Lloyds Banking Group PLC39.00 GBX-0.54

About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.

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