Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Profit margin fears dog housebuilders
As AJ Bell investment director Russ Mould observes: ‘The industry has enjoyed a bumper period, supported by rising house prices, low interest rates and Government support in the form of the Help to Buy scheme but there are increasing signs this sunny backdrop is clouding over.’
For the time being these issues are concentrated at the top end of the market. In its latest trading update Bellway mentioned offering incentives on premium priced properties while Crest Nicholson has a higher average selling price than its peers.
The housing market is clearly interconnected and margin issues could start to filter down the property chain. This is a key issue to monitor in forthcoming updates from the industry.
We continue to favour Telford Homes (TEF:AIM) which operates at the more affordable end of the London market and is expanding in the attractive build to rent space. (TS)