Berenberg more positive on UK homebuilders, upgrades Crest Nicholson and Redrow
Analysts at Berenberg turned more positive on UK homebuilders, not least because the worst-case scenarios for house price deflation had been averted.
They also noted the relative improvement over recent months in sales rates, which supported pricing, even as modest build cost deflation was set to occur in 2024.
In particular, they upgraded their recommendations for shares of Crest Nicholson and Redrow, because their asset-backed valuations screened best within the group.
Affordability had also improved, estimating that mortgage payments had fallen to approximately 40% of a typical new homebuyers' earnings.
A "material" fall over time in average land prices was also anticipated, as were new government support measures for the new-build housing market before the end of the year.
The analysts marked up their target price for shares of Crest Nicholson from 220.0p to 310.0p and for Redrow from 466.0p to 643.0p.