Britain’s property market is abuzz with activity. According to online real estate marketplace and FTSE 100 company Rightmove, the average house price is up by over 6% in November this year compared to last year. The number of sales in October was up a whole 50% from last year.
The stamp duty holiday up to March had already propped up the sector, which was impacted severely by the first lockdown. A rush to complete house deals before the deadline has also increased housing market activity.
I reckon that with Covid-19 vaccines expected to be available soon, it will continue to remain robust, positively impacting both FTSE 100 and FTSE 250 stocks.
The only challenge I see to property markets moving forward is Brexit. The chances of a no-deal Brexit are higher than before. This can result in some uncertainty about what happens next in property markets. But on the whole, the prospects for real estate look brighter than not.
FTSE 100 real estate giants like Barratt Developments, Berkeley Group Holdings, Persimmon, and Taylor Wimpey have seen sharp improvements in stock market performance recently. Their improved dividend situation is also heartening. I reckon they will continue to strengthen their positions. FTSE 250 property stocks are on the roll too. Here are three with good prospects.
#1 Derwent London’s prospects have improved
The first is Derwent London, the real estate investment trust which just got upgraded by JP Morgan. It recently reported improved rent collection and also increased its interim dividend a few months ago. When I had last written about it, it wasn’t an immediate buy for me, but it was on my investing radar. Now, I think there’s far less risk to buying the stock and the upside has improved significantly.
#2. Marshall’s a high-performing FTSE 250 stock
The FTSE 250 landscaper Marshalls is another stock I like. I had bought it when the broader stock markets were still uncertain, and it has given me double-digit returns already. I’d be tempted to sell it and make a neat profit if I wasn’t convinced that it’s share price can rise far more. Its sales are back to where they were in 2019, and it has also improved its outlook for 2021. Interestingly, it has also repaid money received under the government’s furlough scheme. This, in particular, sets its performance apart during a bad year.
#3. Bellway’s dividend game is strong
I also like the FTSE 250 home-builder Bellway, which recently started paying dividends again after its order book leapt 43%. Its dividend yield at 4.8% isn’t something to ignore either, especially at a time when dividends are still muted. Its financials have taken a hit, but it appears confident of performance improvements in the future. Much like other stocks, its share price has run up in November’s stock market rally. It has seen an over 30% rise in the month, up to now. I reckon it will continue to rise.
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Manika Premsingh owns shares of Marshalls and Rightmove. The Motley Fool UK has recommended Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020