UBS remains optimistic on UK housebuilders, forecasting a rebound in volumes and margins from 2025.
The sector has faced a 27% decline in completions and a 10 percentage point drop in EBIT margins since 2022, but UBS expects this to mark the trough.
The investment bank highlights that sales rates are up 8% year-on-year (4% excluding bulk deals), with companies including Persimmon, Taylor Wimpey, and Barratt Redrow seeing stable demand.
Housebuilders are also benefiting from an improving planning policy environment, although UBS warns that affordability constraints remain a key challenge.
Despite the downturn, valuations are attractive, with the sector trading at 0.9x price-to-tangible net asset value (P/TNAV), below its long-term average of 1.25x.
UBS maintains buy ratings on Barratt Redrow, Bellway, Crest Nicholson, Persimmon, and Taylor Wimpey, while Vistry remains a sell due to ongoing concerns.
While interest rates and house prices will be critical to the sector’s recovery, UBS sees incremental improvements in planning reforms and stabilising market conditions as key drivers for growth over the next two years.