ASX 200 building and construction shares could receive a boost with the federal government announcing a planned $688 million HomeBuilder stimulus package. The income tested program is expected to last 6 months and aims to support jobs and activity in the construction sector.
Under the program, eligible individuals will receive a $25,000 cash grant to spend on constructing a new home or on renovations to their existing property. The stimulus package comes amid a projected decline in housing construction activity as a result of the coronavirus pandemic.
Here are 2 ASX 200 building shares that could get a boost following the roll out of the HomeBuilder stimulus package.
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Brickworks Limited (ASX: BKW)
Brickworks is a leading supplier of bricks, masonry and roof tiles across Australia and North America. The ASX 200 company boasts 26 manufacturing sites and over 40 design centres throughout Australia. It is one of the world's largest building materials manufacturers and has a highly diverse product portfolio.
Brickworks recently provided a trading update which highlighted the impact of coronavirus on the construction sector. The company reported a 10% decline in sales revenue in Australia for the 4 months to May 2020. In addition, Brickworks reported a 30% decline in sales activity for its US operations during April and May.
Despite this bad news, the Brickworks share price has jumped more than 38% from its lows in April. It could also be poised to surge further following execution of the government's stimulus package.
CSR Limited (ASX: CSR)
CSR offers a wide range of products used in the later stages of home construction and renovation. The company produces notable brands such as Gyprock plasterboard, PGH bricks, Hebel concrete blocks and Bradford insulation.
CSR released its annual report in mid-May for its financial year ending 31 March. The ASX 200 company reported a 6% fall in building products revenue for the year. It also reported a 3% decline in revenue from building products for the first 6 weeks of its 2021 financial year compared to the prior corresponding period.
Furthermore, CSR scrapped its final dividend in response to the coronavirus crisis in order to conserve capital. Due to the uncertain and tough economic conditions, CSR has not provided profit forecasts for the current financial year. Notwithstanding the uncertainty, the CSR share price has rebounded more than 57% from its March low.
Are these ASX 200 building shares in the buy zone?
In my opinion, ASX 200 building and construction share prices could experience a short-term boost. However, I feel the long-term outlook remains extremely uncertain. Due to the nature of contract life cycles in the sector, impacts of coronavirus could still be felt in 6 to 12 months' time. In addition, with the Australian economy facing a recession, it's unknown how long the government's cash grant will be able to help support the building and construction industry.
