Broker snap: Housebuilders set to write up land values

22nd Dec 2009 11:35

Goldman Sachs has turned bullish on two of the UK's biggest housebuilders, even though it sees little prospect of growth in house prices in 2010.The housebuilding sector has underperformed the market by around a quarter in the last three months, leaving the likes of Taylor Wimpey, Barratt Developments and Berekeley Group looking cheap. The US bank has upgraded Taylor Wimpey and Barratt from 'neutral' to 'buy', and is also a buyer of Berekley.In contrast, Redrow gets the thumbs down and is rated a sell.Goldman believes that although a revival in house prices in the UK may be two years off, the housebuilders have been too enthusiastic in writing down land values during the last two years, and that some of these write downs will be reversed in the coming months.Taylor Wimpey, cited by Goldman Sachs as the most aggressive in its write downs, has been given a price target of 47p, while the price target for Barratt is 165p.