UK Housebuilders: House Price Regression. Returns. Risks.

Research evidence excerpt

UK Housebuilders: House Price Regression. Returns. Risks.

Foundation

June 11, 2026 04:00 AM GMT

Morgan Stanley & Co. International plc+MUK Housebuilders | Europe Peter Ajose-Adeogun

Equity Analyst

House Price Regression. Peter.Ajose-Adeogun@morganstanley.comRonald Ho, CFA +44 20 7677-1618

Quantitative Analyst

Ronald.Ho@morganstanley.com +44 20 7425-2722

Returns. Risks. Cedar Ekblom, CFA

Cedar.Ekblom@morganstanley.com +44 20 7425-4623

House prices are the key driver of housebuilder earnings and

Building & Construction

equity performance. Our regression framework shows mortgage Europe

approvals, mortgage rates and consumer confidence are key Industry View In-Line

drivers. These are trending negatively. We see downside risk to What’s Changed

margins for HB equities. Earnings cuts. Cautious sector view. VistryPrice TargetGroup PLC (VTYV.L) From380p To270p

Persimmon PLC (PSN.L) From To

Key Takeaways Price Target 1,390p 1,330p

House prices are the EPS driver: small ASP moves have outsized effects on gross Berkeley Group Holdings PLC

profit, ROE. Regression suggests housing market weakness has further to run. (BKGH.L) From To

Price Target 2,990p 2,800p

House price growth too weak to offset rising build costs; margin pressure the key

Barratt Redrow PLC (BTRW.L) From To

earnings risk across the sector. Price Target 300p 260p

We cut FY26/27/28E EPS by c.7%/13%/13% on lower ASP, slower completions and Taylor Wimpey PLC (TW.L) From To

weaker margins; PTs fall 4-29%. Price Target 75p 65p

Sector P/B (0.6x) in 10th percentile vs. 10yr average. Screen cheap, but negative

earnings revision risk. AVG MSe FY27 PBT -4% vs. consensus.

Underweight Taylor Wimpey/Berkeley. Relative preference for Persimmon.

House prices matter disproportionately for housebuilder equities. Sector share