Broken! Moi?

Whilst the reaction to the Housing White Paper Fixing Our Broken Housing Market has been muted (to be kind), clearly the currently ‘broken’ housing market is working well for the house builders.  In contrast to the largely negative or neutral reaction from commentators, the stock market’s reaction has been positive.   The volume house builders have been doing very well – thank you very much – from the ‘broken’ housing market and the share price reaction suggests that the market expects it to stay ‘broken’.

The publication of the White Paper last Tuesday (7th Feb) resulted in quite big increases in the share prices of the volume house builders.

Share price (p)
6th Feb 8th Feb  % change
Bellway 2516 2621 4.17%
Berkeley 2834 2921 3.07%
Taylor Wimpey 169.8 176.2 3.77%
Bovis 844 862 2.13%
Persimmon 1938 2016 4.02%
Barratt 493 507 2.84%
Gallliford Try 1402 1444 3.00%
Mean 3.29%

The FTSE 250 grew by 1.25% between the 6th and the 8th February.  A good part of that 1.25% would have been caused by the house builders.  The reaction of the shares prices  of construction and building materials companies was more muted.

Share price (p)
6th Feb 8th Feb % change
Costain 381 388 1.84%
Balfour Beatty 264 268 1.52%
Morgan Sindall 824.5 827 0.30%
Norcros 169.7 170.3 0.35%
Marshalls 302.7 308 1.75%
Mean 1.15%

The stock market clearly doesn’t expect the White Paper to produce large benefits for construction construction companies and building materials suppliers.  However, it’s notable that the share prices of the large commercial REITs did quite well too.

Share price (p)
6th Feb 8th Feb % change
Land Sec 999 1026 2.70%
British Land 588 601 2.21%
SEGRO 471.6 479.4 1.65%
Derwent 2499 2577 3.12%
Hammerson 548 562 2.55%
Mean 2.45%

Looks like the benign regulatory and policy  regimes for land owners are expected to continue.


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