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By Malcolm Stacey | Saturday 13 September 2014
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 Totters. When I said a month or two ago that British housebuilding firms were a good investment, I did not realise how right I was going to be.
This is because I’m sometimes wrong, as you know. But almost as soon as I posted the article, a handful of firms reported higher-than-expected numbers and the shares reacted in the usual zippy fashion.
Well, at the end of the week some more tasty news came in. This came in the form of an increased price target from J P Morgan Cazenove for shares in building giants, Barratt Developments (BDEV). And this positive outlook boosted the stock price of Persimmon (PSN), Redrow (RDW) and Bovis Homes (BVS).
None of this should surprise you. The facts are simple and the market forces in favour of house building are becoming stronger by the day.
Firstly, the government is giving some very tasty incentives to buy houses – and not just to first-time buyers.
Secondly, there is an almost crisis-level shortage of houses. This is what’s driving up house prices, particularly in the lucky South East.
Thirdly, the number of divorces is rising even higher. Each family splitting requires a new home. The number of single occupancy homes is growing like there’s no tomorrow – and this boom requires hundreds of thousands of new houses and flats.
Fourthly, the large band of immigrants also need homes.
Now you don’t have to be Mr Super Brain to realise that the current share boom among UK building firms has only just begun. As purses loosen with the demise of the last recession, house prices will rise with the growing demand – and builders will make even more money.
It’s not too late, chums, to buy some shares in British building outfits – but I bet you wish you’d gone ahead when I first told you.
Now it’s celebration all round in the Punter’s Return.
Malcolm Stacey has been writing about shares for more than 20 years. His first book "The Armchair Tycoon" was first published in 1998 but a revised 2014 e-version is now available. To obtain a FREE copy fill in the form HERE
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