Housebuilders more robust than given credit for, says Barclays

Some housebuilding stocks are looking oversold, analysts at Barclays said on Wednesday, as the sector's trading has remained robust but investors have been spooked by political and economic issues.

"Despite persistent political and economic headwinds, current trading has remained robust for the most part," analysts said in the note to clients on Wednesday, noting that some shares down by as much as 35% from their late October highs and moving to a neutral stance on the sector.

On the Help to Buy scheme, which some investors and commentators expect to be weakened by Chancellor Philip Hammond in his upcoming Budget, the analysts predicted it will be extended beyond the current 2021.

“So pivotal is it to the government’s overall housing aims that we expect it to overlook its shortcomings.”

But there were some words of caution: "For most builders, forecasts are stable at high levels, but evidence suggests that the earnings upgrade cycle has largely run its course for now, amid a more uncertain outlook.”

The bank upgraded Taylor Wimpey to 'overweight' from 'equal weight', saying the shares now offered a “very attractive” 11 per cent dividend yield, and moved Bovis Homes to 'equal weight' from 'underweight' with a high yield and well advanced in its turnaround.

Crest Nicholson was downgraded to 'equal weight' from 'overweight', which analysts said was "to reflect more challenging conditions in the company’s southern footprint".