LIVE MARKETS-UK housebuilders at a tipping point

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UK HOUSEBUILDERS AT A TIPPING POINT

UK housebuilders .FTNMX402020 had a disappointing 2025, ending the year little changed, compared to a 20% gain for the FTSE 350 .FTLC.

Data remains disappointing. Today's PMI showed construction output contracted for the 12th straight month, its longest run in two decades. The residential building sub-index dropped to its weakest reading since May 2020, when the coronavirus pandemic halted building activity.

But analysts at Rothschild & Co Redburn believe the home building sector may be at a tipping point.

The firm says confidence in Britain remains fragile, but with the budget in the rear-view mirror and interest rates coming down, things might be improving.

"For homebuyers, the arrival of greater certainty is welcome, and this alone should bring certain buyers back to the table," writes Rothschild & Co Redburn's Will Jones and Harry Dow in a note.

"Allied with the improving affordability picture, our single biggest point of emphasis, prospects feel firmer as we look to 2026."

The firm said it prefers house builders "operating in firmer market segments, best positioned for evolving policy and with strong balance sheets, all within the bounds of our valuation framework."

Rothschild & Co Redburn has 'buy' ratings on Barratt Redrow BTRW.L, Bellway BWY.L, Taylor Wimpey TW.L and Persimmon PSN.L, with the latter their preferred pick.

Berkeley Group BKGH.L, Crest Nicholson CRST.L and Vistry VTYV.L are held at 'neutral'.

(Samuel Indyk)

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