Don’t let the FTSE 100’s steady rise fool you. Some of the best UK shares are still bargain buys in my view. They’ve been hit hard by the trinity of the stock market crash, lockdowns, and recession. But otherwise, these are robust stocks. Any investor would benefit from holding them in their portfolio. At a time of dried-up dividends, they look even more promising than usual.
I’m talking of property stocks. Recessions are bad news for the real estate market. When there’s uncertainty about jobs and income, people are less likely to buy property. This is because it’s an investment rather than a consumption spend. The lockdown halted construction activity as well, impacting property supply. As Brexit talks proceed, property markets might see more uncertainty.
Dismal real estate market’s an opportunity
The dismal real estate situation is showing up in the numbers, and I suspect the property market will remain muted for some time. I think we’ll have a better idea of where it’s headed only by year end. That’s when the lockdowns will be a memory and the state of the economy will be clearer.
However, stock markets can be prescient. Investors are naturally driven to find good investment bargains, and signs of a turnaround in real estate will undoubtedly drive them to property stocks as well. The real economy and the property markets themselves might take a while to pick up, but I reckon FTSE 100 real estate stocks would already have started to do so.
Best UK shares to buy
In fact, they already have. Consider the FTSE 100 house-builder Persimmon. Its share price is already 48% higher than the lowest it touched during the crash. I wouldn’t be too disturbed by the fact that it’s still 30% below its pre-crisis highs. It may sounds like a poor place to be compared to other FTSE 100 stocks, which are already at pre-crisis levels, but it’s also a buying opportunity.
PSN has been financially healthy in the past and hasn’t availed of government support to keep going during the lockdown either. It also paid good dividends until the market crash. I think it’s only a matter of time before it accrues capital gains. I’d invest now. Similarly, other FTSE 100 property developers like Barratt Developments and Taylor Wimpey are among the best UK shares to invest in too, in my view.
But if you are unconvinced or uncertain of buying traditional property stocks, I’d like to suggest Rightmove, which sits at the intersection of technology and property. In a sense it’s safer than property builders. It’s an online market, which has one less thing to worry about (the actual construction of houses) during a market slowdown. As long as people want to rent or buy property, RMV is in a good place. Even during a recession, it’s services are impacted only as much.
Whichever way we look at them, property stocks do appear to be among the best UK shares to buy now.