Despite falling house prices, is now the perfect time to invest in housebuilding stocks?

first_img Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. House prices are forecast to fall up to 5% in 2020 as the housing market is affected by economic uncertainty. At the time we went into total lockdown, the share price of the FTSE 100’s big four housebuilders – Persimmon (LSE:PSN), Barratt Developments (LSE:BDEV), Taylor Wimpey (LSE:TW) and Berkeley Group (LSE:BKG) – had already fallen at least 43% from their year highs. However, I believe the long-term outlook for this sector remains positive, and now could be the perfect time to invest.Short-term gloomIt is easy to understand why house prices are forecast to fall this year.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Supply of credit: The banks have tightened their lending criteria due to economic uncertainty, with nearly 50% fewer mortgage products available now than there were before lockdown. In particular, the number of lenders willing to offer 90% loan-to-value mortgages, essential for first time buyers, has shrunk dramatically.Supply of houses: All the big four housebuilders stopped working for a period during total lockdown. In the period since, they are working on much reduced outputs as they comply with social distancing working restrictions and supply chain difficulties. Therefore, there will be less houses ready to sell this year.Long-term outlookDespite the short-term pressure on house prices, there is plenty to be optimistic about.There is a national housing shortage and, to help alleviate this, the government is targeting 300,000 new houses per year by the middle of the decade. To assist, it continues to bankroll the Help to Buy scheme for first-time buyers and, where appropriate, relax planning constraints to facilitate new developments.Interest rates remain at historic lows, making borrowing cheap and affordable. Since estate agents re-opened in May, new enquiries have been better than expected, with people wanting more space to accommodate home working.Cash is kingThe short-term fall in the value of the big four housebuilders is contrary to their strong balance sheets.Last year, they each had revenues in excess of £2.9bn and operating profits of at least 19%. However, it is their retained earnings (cash) of at least £600m that convinces me that they can still take advantage of the long-term opportunities in the sector once the storm passes.Prior to the coronavirus outbreak, housebuilders were among the most generous dividend payers on the FTSE 100. Berkeley Group is now the only one of the big four that continues to make dividend payments. It is easy to understand why, as it has retained cash of £1bn and made 26% operating profit last year. It currently trades 23% off its year high and it is top of my watchlist in the housebuilding sector.In summary, long-term demand, low interest rates, government support and excellent balance sheets all suggest an excellent long-term outlook for the big four housebuilders. I think demand for new houses will remain constant despite economic uncertainty, and house prices will stabilise. I believe the current share prices are currently too low and think now could be the perfect time to invest. Simply click below to discover how you can take advantage of this. See all posts by Ben Race Ben Race | Friday, 19th June, 2020 | More on: BDEV BKG PSN TW Ben Race has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.center_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Our 6 ‘Best Buys Now’ Shares Image source: Getty Images Despite falling house prices, is now the perfect time to invest in housebuilding stocks? I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. 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