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Yet More Reasons to Look Into British House Builders

By Malcolm Stacey | Thursday 5 January 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Hello Share Monkeys. The share price of many well-known British builders has been revitalised already this year. The main driver seems to be the view of Deutsche Bank that there is significant value in this kind of investment.

Now we all know that this kind of recommendation can go wrong, but in my experience this big German bank is on the ball. And its commendation about UK builders doesn’t surprise me as, over the last six months, I have also maintained that this is an attractive sector. It is so because of basic 11-plus economics which stresses the importance of supply and demand.

If supply doesn’t match the number of people who would like to live in their own home - and not rely on the cut-throat rental sector - then house prices are highly likely to rise.

Add to that momentum the fact that the government has produced some favourable schemes to encourage home ownership and it seems to me that housebuilders will prosper. OK, they have not really done so until now, but that only emphasises a ‘buying opportunity’ strategy.

Deutsche Bank picks out Taylor Wimpey (TW.). I’ve not featured this company for some time, but I see the German bank’s point.

It has also put McCarthy and Stone (MCS) on its buy recommendations. This canny outfit has a huge development of flats for old folk on my doorstep. And those brand new homes, which seem rather expensive to me, have sold well.

OK, there were Brexit worries that foreigners would be put off buying British property, and house prices have come off the boil in the London area. But elsewhere, the vote seems to have made little difference so far.

The government plans a white paper on the subject in January. As it keeps overstating its commitment to build more homes, this document could bear even better news for house builders.

Builders often have a juicy dividends on offer, as more and more of us choose shares with high twice-yearly pay-outs. I’ve commended quite a few builders to your further research over last year. You might want to look them up in our search engine. Or perhaps you don’t. We all know, I’m not always right.

Even when speaking in the Punter’s Return.

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