Source: Sharecast
In a note published on Wednesday, the bank said: "The UK has not built enough houses for years, but with the general election likely to deliver a pro-housing Labour government, coinciding with an improving UK economic outlook, we think this can change over the next five years."
It upgraded Taylor Wimpey to ‘buy’ from ‘hold’ based on its leverage to a multi-year volume recovery, land bank length, dividend yield and valuation.
Peers Berkeley Group, Crest Nicholson and MJ Gleeson were maintained at ‘buy’.
In its base case scenario, Berenberg forecast a "steady recovery" in housing demand post 4 July, with 6% growth in housing starts per annum from 2025-29, resulting in 2029 starts at 207,000.
Other scenarios considered include the reintroduction of Help to Buy, and a change in the private/social mix of new developments. Currently standing at around 80/20, Berenberg noted that it could move as high as 50/50 under a Labour government.
It also suggested a fourth scenario, where the newly elected government takes a "more radical approach for the revitalisation of the historical model of state-led housebuilding".
It continued: "We envisage a development model where the state is the capital provider with build work undertaken by contracts on a fee model.
"While complex to implement, we think such a policy would be the smartest way to achieve significant growth in both total and social housing."
Berenberg said that should this scenario emerge, Kier Group could be a beneficiary. The broker currently has a ‘buy’ rating on the construction firm, "valued on a base case discounted cash flow, sense-checked against suitable peer multiples".
As at noon BST, shares in Taylor Wimpey were up 1% at 151.8p while Keir was largely flat at 145.8p.
Berkeley was up 1% at 5,295p, while Crest Nicholson and MJ Gleeson were largely unchanged at 243.2p and 565.4p respectively.