Share Prices of UK's Biggest House Builders Soar Amid Housing Recovery

Britain's biggest house builders have seen their share prices outperform FTSE indices by some distance as a resurgent housing market helps lay the foundations of the UK's economic recovery.

Controversial stimulus for the mortgage market under the Help to Buy scheme has helped drive up housing demand by making home loans easier to get hold of. The volume of new homes built in 2013 has also picked up pace sharply.

A constrained housing supply is helping to lift house prices, tempting builders to chase greater profits by building more homes – and it looks like investors are being lured in.

Analysis by IBTimes UK of the share prices of the UK's five biggest house builders by revenue shows just how far ahead of the wider markets' performance they have been since the beginning of 2013 when the economic recovery – and that of the construction sector – began.

From when 2013 trading began in January that year to the time of publishing this article, the FTSE All Share index has lifted 17%. The FTSE 100 is 14.33% higher and the FTSE 250 is 31.39% above where it was.

Persimmon shares are currently 75% above where they were when 2013 trading began, though at 1,406p they are still below their pre-crisis peak of 1,526p.

Barratt Developments shares are a whopping 106% higher than they were around fourteen months before, at 421.20p. That is well below Barratt's pre-crisis peak of 1,266p, suggesting the stock has a lot of growth potential in the coming months and years.

Taylor Wimpey's share price is 92% higher than in January 2013 at 126.50p, below its pre-crisis peak of 518p.

Two of the top five house builders have seen their share prices rocket and are above their pre-crisis peaks, despite the construction's sector's catastrophic 2012 collapse in output.

Berkeley Group shares are 52% above where they were in January 2013 and at 2,678p are higher than their pre-crisis peak of 1,935p. They troughed at 634.50p in mid-2008.

Bellway's share price is 56.75% above January 2013 at 1,613p. Its pre-crisis peak was 1,279p, but it troughed in late 2006 at 420.25p.

In a research note on the Help to Buy scheme, Fitch Ratings warned that increasing the flow of mortgage credit to consumers would unlikely result in substantially higher house building volumes, instead boosting the profits of construction firms and lenders.

However the volume of new homes registered with the National House Building Council (NHBC) hit 133,670, up 28% on the year before and the most since 2007.

This is still well below government estimates on what is needed for supply to match demand – 290,500 a year until 2030.