DURING his election campaign, President Barack Obama told voters that America could “build itself out of recession”. That’s just what the housebuilders are hoping they can do. Barratt Developments was putting a brave face on it yesterday, as it reported higher operating margins and strong forward sales. Galliford Try and Kier Group were also cheery.
Still, investors were unconvinced, and Barratt shed 5.75 per cent while Kier Group fell two per cent. They are right to be concerned: a recovery in the housing market looks increasingly unlikely. Mortgage approvals in January were down to an eight month low of 35,083, while the Bank of England says that there could be a double dip in prices.
For those who do want to take a punt on a recovery, however, there could be big rewards. Barratt, which closed at 114.8p yesterday was trading at 725p in May 2007 before the sub-prime crisis while rival Taylor Wimpey was then worth 380p-a-share compared to yesterday’s 36.38p.
There are better bets than the highly-geared Barratt and Taylor Wimpey though. If investors fancy their chances, Bovis, Bellway and Persimmon are stronger picks.