Are UK housebuilder stocks still cheap?

Mortgage rates are starting to fall. The new government is promising a housebuilding boom.
Is it time to consider buying shares in UK housebuilders ahead of a sector recovery?
In this piece I’ve taken a look at the issues affecting the sector and the current state of the UK’s main listed housebuilders. Read on to see why I think these companies could be worth a closer look at current levels.
Politics or business?
It’s hard to separate the UK’s housing market from politics.
In the aftermath of the 2008 financial crisis, the Help to Buy Scheme helped to prevent a logical market correction. Instead, it unleashed a decade-long surge of house price inflation. Prices were driven even higher by the rocket fuel of ultra-low interest rates – unprecedented at any point in modern UK history.

Source: Bank of England (July 2024)
Big housebuilders were prime beneficiaries of this policy. They enjoyed what I would describe as abnormal profit margins for many of these years.

However, when interest rates started rising in 2022, the cycle started to turn. Higher borrowing costs had a predictable impact on affordability.
UK-wide...