Depressed valuations and difficulties in getting shovels in the ground could lead to more bids for both the UK’s listed housebuilders and builders’ merchants, as private equity (PE) groups target weakened sectors.
Housebuilders with plenty of sites ready to go are even more attractive, given UK demand for houses is not going away. Discounts remain steep in the sector, at the same time as portfolio valuations are trending down. The value of private housing projects starting on site fell by 23 per cent in the three months to April and were 51 per cent lower than the same period a year ago, according to data provider Glenigan.
Although the value of detailed planning approvals rose by 20 per cent on the previous year, this was driven by approvals for a handful of major schemes. Underlying approvals (for projects worth less than £100mn) were 22 per cent lower than the prior-year period.