UK housing boom: 2 FTSE 100 shares I’d buy before 2022

The housing market is at its busiest since the 2007 boom. And I think these two FTSE 100 shares are good options for my portfolio to capitalise.

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We are in the midst of a major housing boom. The average price of a house in the UK has risen £15,500 over the past 12 months and currently stands at £240,000. The annual growth rate has skyrocketed this year to 6.9%, up from 3.5% in October 2020. The buyer demand is currently 28% above the five-year average and analysts expect this to extend into 2022. There are several FTSE 100 housing shares I can choose from to grab a piece of this booming industry. But two stand out over the rest and here’s why.

FTSE 100 ‘no-brainer’

Rightmove (LSE:RMV) is UK’s largest online property portal. I like this stock because it is a virtual middleman between agents, owners, and buyers, and it does the job very well. This is backed up by the number of visitors to the site. If you, like me, have been property hunting in the UK, it is safe to say that Rightmove popped up more than once. 

At the time of writing this article earlier today, Rightmove shares are trading at 743p, seemingly immune to the falling FTSE 100 index. Returns over the last 12 months have been decent at 18.7%. Rightmove shares have recovered well from pandemic lows. The property lister has low operating costs which means high profit margins and potential revenue growth.

The Covid wave has driven workplaces around the world to become increasingly remote. UK statistics show that over 60% of businesses are considering a hybrid home/office strategy going forward. Our homes now double up as a workstations. And I expect Rightmove to see increased sales over the next few months as young professionals look for better living spaces.

However, the housing market is highly cyclical and we are currently at the end of a decade long spike in rates and sales. The pattern points to a fall in consumer interest and prices soon. And analysts expect the housing boom to cool down in 2022. Also, rising interest rates since mid-2021 could deter potential buyers and eat into Rightmove’s future revenue.

But I think the current era has broken the housing cycle to an extent. And given the efficient business model and market share, I think Rightmove is the top FTSE 100 from the housing sector for my portfolio today.

Bargain dividend stock

Given the market turbulence triggered by the rise in omicron cases, I am turning to dividend stocks to crash-proof my portfolio. And Barratt Developments (LSE:BDEV) offers a mix of a booming sector’s growth potential and a stable 4.3% dividend yield.

The company is looking to grow its already sizeable cache of plots and houses. In terms of property transactions, 2021 was the busiest year for the property market since 2007. And Barratt Developments put excess cash to good use. In a recent business update, the group detailed the approval of 3,735 new plots and expects to approve between 18,000 and 20,000 plots in 2022. The group also expects to complete 17,000–17,250 homes in FY22.

I think this will match the continued demand I expect next year. And it could reflect well in future financials. But increasing labour costs and raw material costs in construction is a big factor. Inflation could impact prices, leading to an overpriced end product which could deter customers.

But Barratt Developments is well-placed to capitalise on this extended housing boom we are witnessing, which is why I am considering an investment in the FTSE 100 company.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Rightmove. 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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