The market seemed to turn its collective nose up at Philip Hammond’s comments on housing yesterday – at least as far as housebuilders were concerned.
Barratt Developments PLC (LON:BDEV), Persimmon PLC (LON:PSN), Berkeley Group Holdings PLC (LON:BKG) and Taylor Wimpey PLC (LON:TW.) all slumped after the Autumn Statement.
The Chancellor failed to mention any update on Help to Buy – a scheme which has helped to prop up demand – after 2021, while a move to cut stamp duty for first time buyers was seen as a positive for estate agents rather than the housebuilders themselves.
What really got the market’s tail up was talk of a review into land banking though, with developers having been accused in the past of sitting on land with planning permission in order to maximise profits.
That was largely seen as a negative, but analysts at Deutsche Bank reckon the opposite is more likely to be true.
Barratt may be beneficiary
“With at least four reviews in the past 15 years all supporting the larger housebuilders view that they are building out all implementable land, we believe this review may instead provide an additional push to local authorities to speed the planning process, and also to increase the supply of land available to the larger housebuilders as the land promoters become more active sellers of their land,” read a research note on Thursday.
With land promoters – which hold over half of all sites with detailed planning – likely to be put under pressure to offload their sites within a reasonable timeframe, Johnson believes housebuilders will be able to snap up land at a “similar, if not better, margin” than currently available.
“This ... should provide an additional supply of land for the housebuilders to purchase and it is this which we believe should underpin the continuation of the flow of strong margin land which the housebuilders are currently benefitting from.”
Johnson adds: “We see the share price weakness post the Budget as a buying opportunity and would particularly favour those stocks with shorter land banks such as Barratt who may be greater beneficiaries of an even more opportune land market.”