Steve was street savvy, but he was not the smartest knife in the drawer, which makes his Delphic comment to Robert Vaughn all the more surprising. What Steve was saying is that “it’s not over yet”; that there is still a lot more to come (sadly for McQueen, who died in 1980 aged 50, it was a future that was not his). The same is true of Brexit and the collateral undulations that it has riven in the UK Housebuilding Sector. Immediately post-the-Brexit-vote, the UK Housebuilding Sector tanked 36% in value in two trading days (24 and 27 June with a weekend in between); and at one stage was off almost 40%.
As at 30 September, however, the deficit was 15% (and 18% from the 24 May all- time high): “who said it was going to turn out like this?”
Near term, we believe there is greater latitude for bad news than good (for which apologies) and the Mayor of London’s proposed inquiry into the impact of foreign investment in the Capital’s housing market has also set the cat amongst the already ruffled pigeons. At the same time, the Government is taking away i.e. the Help to Buy mortgage guarantee scheme will close at the end of this year. But it is also giving with a new £5 billion allocation to speed up building on public land and to offer loans to smaller developers. Don’t hold your breath on the latter though and, nearer term, with the current beneficent dividend flows from the housebuilders, we suggest treating their shares like bonds until the broad sunny uplit lands emerge once more.
The Brexit vote on 23 June caused Calvera -like havoc in the UK Housebuilding Sector and it palpably delineated the share price and value performance in the year-to-date.
Okay, there was a wholly predictable patellar reflex on 24 and 27 June, in particular, but since then the Sector’s gait has been more straight-legged and share prices rose 15% in Q3 against Q2 (and 18% weighted).
In Q3, comprising 65 trading days, the Sector rose on 36 and fell on 29; and it moved up to 7% in either direction on a number of single days.
Month by month, too, July (+12%) and August (+7%) were up but September (-1%) was down.