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FTSE housebuilders have endured a turbulent few years, with share prices of notable players like Persimmon (LSE:PSN) and Crest Nicholson (LSE:CRST) still 40-60% below 2021 peaks.
However, two tectonic shifts are reshaping the sector. These are Labour’s radical planning reforms targeting 1.5m new homes by 2030, and mortgage rates plunging as markets price in Bank of England rate cuts.
These catalysts have driven a 16%-25% sector rally since April 2024, prompting investors to reconsider the embattled industry.
The policy and pricing pivot
Deputy PM Angela Rayner’s planning overhaul represents the most significant pro-development shift in decades, replacing local veto powers with mandatory housing targets and fast-tracked approvals. It could be a massive step forward in unlocking land banks and getting shovels in the ground sooner rather than later. Of course, this pro-development shift comes at a cost. In my native Somerset, new developments and planned developments are already affecting the countryside I grew up in.
Concurrently, lenders have slashed fixed-rate deals below 4% despite the Bank Rate remaining at 4.5%, with traders pricing in multiple 2025 cuts starting 8 May. This dual stimulus of easier construction and cheaper mortgages could revive housing transactions from their post-Stamp Duty holiday slump. Nationwide suggests that prices are already stabilising at £270,752 with 3.4% annual growth.
Value or value trap?
Persimmon trades at 14.1 times expected earnings for 2025. However, its net cash position (£168.8m), sector-leading 4.6% dividend yield, and 65.5% payout ratio suggest disciplined capital allocation. Analysts point to a 15% discount to fair value, with some encouraged by its 2025 completion guidance of 10,500+ homes.
Crest Nicholson presents a riskier proposition. It’s much smaller than Persimmon but worthy of comparison. It’s 21.8 times 2025 price-to-earnings (P/E) ratio reflects turnaround hopes after a disastrous 2024 (£103.5m net loss), but net debt of £59.5m and erratic cash flows raise sustainability questions. The 1.9% dividend yield trails sector averages, though management’s 41% payout ratio leaves room for growth if projections are realised.
| Metric | Persimmon | Crest Nicholson | Sector Average |
|---|---|---|---|
| P/E 2025 | 14.1 | 21.8 | 11 |
| P/E 2026 | 11.9 | 14.4 | |
| P/E 2027 | 10.3 | 10 | |
| EV/EBITDA 2025 | 8.9 | 11.9 | 7.5 |
| Dividend Yield 2025 | 4.6% | 1.9% | 2.9% |
| Net Debt 2025 | -£168.8m | £59.5m |
Persimmon’s premium multiples (versus the sector average) reflect its scale, land banks strength and consistent execution — it delivered 10,500 completions in 2024 despite market woes. Crest’s higher valuation bets on successful restructuring. Recent updates suggest the company could be back on track.
The bottom line
The sector may experience something of resurgence in 2025, although growth’s often priced in well in advance. In all honesty, neither of these companies really excite me, although Persimmon’s 4.6% yield and fortress balance sheet could offer relative safety in a cyclical sector and make it worth a closer look.
I also recognise that growth investors might consider Crest’s potential if planning reforms disproportionately benefit smaller developers. Naturally, this comes with execution risk. I’m watching carefully from the sidelines for now.
