British housebuilders may cut dividends to preserve cash and ride out a property downturn, as high mortgage rates make homes less affordable and economic uncertainty deters buyers.
British house prices to fall in 2023 by around 8% and a housing downturn would mean preservation of cash would be key for builders.
"With the exception of Taylor Wimpey and Berkeley Group, which have dividend policies not based on earnings cover targets, the whole sector is vulnerable to dividend cuts if earnings fall as expected in 2023," said Lammin.to its cash-return plans, but cut its earnings estimates for the 2024 and 2025 fiscal years.
Existing bookings for new homes may ease some of the immediate pressure to cut payouts, although analysts said that could change if cancellations rise and the slowdown gains pace. To attract more buyers, housebuilders may have to offer more incentives, such as providing assistance with mortgage payments and covering expenses for customers making a move.
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