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UK shares to buy: I’d invest £3k in these stocks

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I think some of the best UK shares to buy today are homebuilders. I’m not just saying that. I plan to put my money where my mouth is and invest £3,000 in a basket of companies that operate in the sector. 

UK shares to buy

The UK is currently experiencing a housing market boom. Property values increased by more than 10% last year. Meanwhile, the total value of homes sold in the UK is expected to reach £461bn in 2021, a jump of 46% over 2020

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Several factors are driving the growth. Low interest rates have made homes more affordable, and higher loan-to-value mortgages have also helped borrowers gain access to financing.

On top of this, the UK housing market has been structurally undersupplied for years. And then there’s the race for space. Homebuyers are racing to buy large properties in the country as the pandemic has changed work and living patterns. 

With all of these tailwinds working together, it seems likely the UK housing market will continue to experience growth in the years ahead. As such, I reckon some of the best UK shares to buy are builders Taylor Wimpey (LSE: TW), Persimmon (LSE: PSN) and Barratt Developments (LSE: BDEV). I would buy all three with an investment of £3,000. 

Growth potential 

Taylor is already on track to build more properties this year than in 2020. 

In its latest trading update, the company reported that its total order book was £2.8bn as of the middle of April, compared to just under £2.7bn last year. It has also increased its short-term and strategic land banks by around 10,000 plots. 

Barratt also appears to be firing on all cylinders. According to its latest trading update, it has achieved 13,558 home completions in its current financial year.

In 2019 for the same period, the company completed 11,861 properties. The organisation has also been increasing the size of its landbank, buying up more than 12,000 plots over the past financial year.

Persimmon’s growth is just as impressive. The company’s current forward sales are 23% ahead of last year and 11% the head of the same point in 2019. In addition, the average selling price for homes sold to owner-occupiers is £252,000, compared to £244,500 in 2019. 

Like its peers, Persimmon has also been deploying profits back into its land bank. A total of 6,000 plots have been brought into the business in 29 locations across the UK so far this year. 

All three companies have reported that there is a promising pipeline of land investment opportunities.

UK shares to buy

Overall, all three of these companies are seeing high demand, rising prices and plenty of scope for growth. 

That said, they are facing some headwinds as well. Rising costs and commodity and worker shortages are all causing headaches. At the same time, the three are having to spend tens of millions of pounds to rectify defects on some of their already sold buildings. These challenges could impact growth. A sudden increase in interest rates may also reduce demand. 

Still, despite these risks and challenges, I continue to believe these are some of the best UK shares to buy right now. And I would buy all of them for my portfolio with an investment of £3k. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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