Latest news with #housebuilders
Telegraph
6 days ago
- Business
- Telegraph
This stock is primed to benefit from Britain's chronic housing crisis
Questor is The Telegraph's stock-picking column, helping you decode the markets and offering insights on where to invest. The global financial crisis wreaked havoc on housebuilders. Even in its aftermath, a hugely uncertain economic outlook meant that very few investors considered allocating capital to the sector. However, in the following years, housebuilders such as Persimmon generated exceptional returns as their operating conditions improved and the wide margin of safety previously applied to their market valuations gradually dissipated. Now, the company and its peers face a somewhat similar, albeit less extreme, situation. Persimmon's share price has slumped by 58pc in the past four years, with it now trading on a rather modest price-to-book ratio of 1.2. Although it faces an uncertain near-term future that is likely to dissuade many investors from buying it, the company's long-term prospects are becoming increasingly upbeat. Interest rates, for example, have now fallen by 100 basis points since last year's peak. Yet their impact has not been fully felt due to the existence of time lags. When combined with the prospect of further monetary policy easing, with inflation due to gradually fall to 2pc over the medium term, demand for housing is likely to significantly increase as mortgage rates fall, wage growth gathers pace and prospective buyers look ahead to a more buoyant economic period. Furthermore, the longstanding imbalance between housing demand and supply has arguably worsened since the global financial crisis. Housing starts in 2024, for example, amounted to roughly 132,000 units. This is 26pc lower than the previous year's figure and is 5pc down on 2010's total. Given that the UK's population is forecast to increase by around 490,000 people per year between 2022 and 2032, demand growth is likely to continue to outstrip increases in supply. This could result in housebuilders such as Persimmon enjoying higher volumes and increased average selling prices that together bolster its financial performance over the coming years. The company is well placed to capitalise on an upbeat outlook for the UK housing market. Its recently released trading update for the period from the start of the calendar year to 27 April showed that its land bank increased by just over 2pc to 83,800 plots. It also has a net cash balance of around £259m that puts it in a strong position to overcome potential short-term challenges while continuing to invest for long-term growth. The firm's trading update additionally stated that it remains on track to deliver a 6pc rise in completions for the full year. Average selling prices, meanwhile, were up 4pc during the period. The company is currently forecast to generate a 10pc annualised rise in earnings over the next two financial years. This further suggests that its shares remain undervalued following their decline over recent years. Clearly, there is a very long road to recovery for Persimmon's share price. Indeed, it is currently down 53pc since Questor tipped it as a 'buy' during October 2017. In doing so, it has lagged the FTSE 100 index's performance by 66 percentage points. Since our initial recommendation, of course, the company has paid generous dividends. In fact, our income return amounts to 42pc. This means that, on a total return basis, we are down a far more modest 11pc. While still hugely disappointing, this highlights the stock's income potential over a sustained period. Given that it has a dividend yield of 4.5pc at present, with shareholder payouts covered a healthy 1.5 times by earnings last year, the company remains a highly worthwhile income investing opportunity for the long term. In the short run, Questor would be unsurprised if Persimmon's share price exhibits heightened volatility. While inflation is set to fall to the Bank of England's target over the medium term, the central bank anticipates it will rise to 3.7pc later this year. This will almost inevitably prolong the process of monetary policy easing, which means investors in the housebuilder will need to be patient. In the long run, though, they are likely to be handsomely rewarded. The company's solid balance sheet, attractive market valuation and upbeat operating outlook mean that it offers significant return potential over the coming years.
Bloomberg
7 days ago
- Business
- Bloomberg
UK to Cut Planning Hurdles for Small Builders in Housing Push
The UK government said it would cut back planning hurdles faced by smaller housebuilders, as Prime Minister Keir Starmer seeks to deliver on his target of building 1.5 million new homes. Minor developments of as many as nine homes will face simpler planning requirements and faster decision-making, while sites of between ten and 49 homes will also face lower costs, the Ministry of Housing, Communities and Local Government said in a statement late on Tuesday.
Bloomberg
25-05-2025
- Business
- Bloomberg
New Rules Could See Housebuilders Who Leave Sites Unfinished Stripped of Land
Housebuilders who leave vital development sites unfinished for years could face losing their land to local councils under new Government rules. For the first time, developers will have to commit to delivery time frames before they get planning permission.
The Guardian
21-05-2025
- General
- The Guardian
Britain should adopt the Passivhaus standard to cut energy costs in new homes
Regarding your article (Poor building standards add £1,000 to energy bills of new homes, analysis finds, 16 May), the solution is very simple: the government should adopt the Passivhaus standard that has been established in Germany for over 25 years. Its use there results in buildings with little or no heating requirements as the buildings are super-insulated and extremely airtight, and have mechanical ventilation and heat reclaim systems to distribute filtered air throughout the property. This can obviate the need for solar panels and heat pumps, which have a lifespan of around 25 years. However, housebuilders in the UK do not yet have the desire to build houses this way as it requires site staff be motivated to build in a way that prevents air leakage and to care about build quality, something that is sorely lacking here. The higher build cost for the fabric would be offset by the absence or reduction in the cost of heating installation. We have yet to see how the future homes standard will compare, but I for one am not holding my BirchBrockweir, Gloucestershire Have an opinion on anything you've read in the Guardian today? Please email us your letter and it will be considered for publication in our letters section.
The Guardian
16-05-2025
- Business
- The Guardian
Poor building standards add £1,000 to energy bills of new homes, analysis finds
People living in newly built homes are being hit with energy bills that are nearly £1,000 a year higher than need be because of the poor standards to which they have been constructed. Occupants of homes built in the past seven years have paid about £5bn more in energy bills than they would have if regulations requiring new homes to be low-carbon had not been scrapped in 2016, according to analysis seen by the Guardian. Equipping new homes with heat pumps, solar panels and high-grade insulation at the time of construction would have cost between £5,000 and £8,500 for most of the period since 2016. Housebuilders, however, have long claimed building to such standards would be prohibitively expensive. Instead, most new homes have been built to lower standards of insulation, and with gas boilers instead of heat pumps. About six out of 10 new homes are still being built without solar panels. While the government has recently confirmed new regulations are likely to require renewable energy generation to be incorporated in most new homes, which is likely to mean solar panels in most cases, there are still questions over whether an adequate number of panels will be mandated. Jess Ralston, energy analyst at the Energy and Climate Intelligence Unit, the thinktank that produced the analysis, said: 'Governments giving in to housebuilder lobbying have left Britain with more poor-quality homes, more dependent on foreign gas, and more exposed to the highly volatile gas markets during the ongoing energy crisis. Unless we lower our gas demand by building better, warmer homes that run on heat pumps then we'll just have to import more from abroad, as the North Sea continues its decades-long decline in output.' Banning gas boilers for new homes, which is an option the government is still examining, would have further benefits, according to separate research that found it would make the UK the second biggest market in Europe for heat pumps, after France. This could kickstart higher growth in the sector and spur more boiler manufacturers based in the UK to boost their heat pump businesses. The MCS Foundation, a charity that certifies low-carbon technology, said the UK at present installed the lowest number of heat pumps per household in Europe. But if incoming standards on new homes were to require heat pumps, sales could quadruple from 100,000 a year to about 400,000, generating skilled jobs in manufacturing and installation. However, Neil Jefferson, the chief executive of the Home Builders Federation, rejected the findings of the ECIU analysis. He said: '[The findings are] based on totally incorrect assumptions about the policy timeline, and the suggested savings are as a result completely wrong. New-build homes have become increasingly more energy efficient and now save owners thousands of pounds in energy bills compared with older homes. Significant progress continues to be made, with implementation timetables reflecting the complex requirements, rate that technologies develop and need to develop supply chains.' The zero-carbon homes standard was first set out under the last Labour government in 2006, and housebuilders were given a decade to prepare before enforcement that was to be implemented from 2016. But under fierce lobbying from housebuilders, those regulations were scrapped under David Cameron in 2015, and nothing has since been put in place to replace them. The last government started work on a 'future homes standard', but it was delayed several times. Energy efficiency standards for new homes were made more stringent from June 2022. Labour is now planning to publish a revised regulation later this year to apply to the 1.5m homes the government has pledged to ensure are built by mid-2029, but campaigners and experts are worried that it will be weakened in response to housebuilder lobbying, and that it may not include heat pumps and battery storage, or rules for an adequate number of solar panels. The government has also given way on wood-burning stoves, which will now be allowed in new homes, despite findings that even the government-approved 'eco design' stove standard results in high levels of air pollution. A spokesperson for the Ministry of Housing, Communities and Local Government said: 'The future homes standard will be published later this year, and will provide the country with homes that are future-proofed, with low carbon heating and high levels of energy efficiency. This will reduce reliance on fossil fuels and cut energy bills for consumers.' The 1.35m homes built to poor standards since 2016 will eventually have to be refurbished to meet low-carbon standards at an estimated cost of about £20,000 per household. The Conservative party derived about a tenth of its donations from housebuilding and property development companies from 2010 to mid-2023, according to analysis by the Guardian. An 'uplift' to energy efficiency was made in the building regulations for England and Wales in 2022, requiring higher standards of insulation. The ECIU took this into account in its estimates. Only about 5% of new homes built in the UK last year were fitted with heat pumps, despite these being much cheaper to install during construction than to retrofit. Only about 13% of newly built homes were fitted with solar panels in 2023, and campaigners warn that some homes are being fitted with an inadequate small number of panels. Work by the Royal Town Planning Institute has also shown that new homes are not being well served by public transport, and that only about half of the 'nature enhancement' measures supposed to be a condition of new developments – such as new trees, bird and bat boxes, hedgehog highways and invertebrate boxes – were implemented for new homes in England.
