Goldman Sachs sees risks rising for U.K. home builders
U.K. home builders have had a strong run of late. The FTSE 350 home construction index — with companies including Persimmon PSN, +3.50%, Berkeley Group BKG, +2.11% and Barratt Developments BDEV, +4.82% — has bounced 30% of the lows of the year.
Goldman Sachs strategists, however, warn the sector is vulnerable to two things. The first is the sustainability of house prices. Once the U.K. furlough rules end at the end of October, Goldman Sachs economists expect the U.K. unemployment rate to rise to 9%. Another risk, they say, will be the end of the stamp duty holiday.
The FTSE 100 UKX, +0.74% on Monday enjoyed solid gains, rising 0.6% in afternoon trade. Some of the hardest-hit stocks of the year advanced, including Rolls-Royce Holdings RR, +6.03%, Melrose Industries MRO, +6.17%, and Royal Dutch Shell RDSA, +2.10%.
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