UK housebuilder and building-material stocks rallied on Monday after Andy Burnham unveiled a new equity-loan scheme for first-time buyers in England. Barratt Redrow led the FTSE 100 higher with a 14% gain, while brick-maker Ibstock jumped 21%. Analysts flagged which builders stand to benefit most, and which face bigger hurdles to take part.
Housebuilders lead the FTSE 100 higher
Shares in Barratt Redrow surged 14%, making it the best performer across the FTSE 100. Housebuilders dominated the FTSE 250 too, with Vistry, Persimmon, Taylor Wimpey and Bellway all up between 14% and 16%.
The rally followed Burnham's weekend announcement of "Your First Home," a scheme intended to help buyers in England who have a regular income but have been unable to save a large deposit or don't have financial support from their family. Under the scheme, buyers get a 20% equity loan with an initial interest-free period and a minimum deposit of just 2.5%. Household income caps, a deposit cap and price caps on eligible properties will also apply.
Building material suppliers rally too
The advance spread beyond housebuilders. Ibstock jumped 21%. Marshalls rose 12%. Forterra and Breedon gained 14% and 9% respectively, and Topps Tiles added 6%.
Richard Hunter, head of markets at Interactive Investor, said the new policy would be a welcome boost for an industry beleaguered by higher mortgage rates, strained affordability and a slow planning process for new homes.
Analysts flag winners, losers and open questions
Anthony Codling, managing director at RBC Capital Markets, said housebuilders with the most exposure to the south and south east, such as Crest Nicholson, and the more liquid stocks — Barratt Redrow, Persimmon and Taylor Wimpey — would outperform, while Vistry, with the least exposure to open-market homes, and Berkeley, whose homes are likely to be priced above the scheme's price cap, would underperform on a relative basis. He called the scheme the catalyst the sector needed for a re-rating, adding: "Christmas has come early for the UK housebuilders."
Adrian Kearsey, an analyst at Panmure Liberum, noted MJ Gleeson shares rose 19% and Persimmon gained 16%, saying the key winners are likely to be housebuilders with a lower-price product. He cautioned it remains unclear what income and property value caps will apply, and what financial contribution housebuilders must make to participate — a hurdle that, if too high, could limit developer take-up and may preclude housebuilders with stretched balance sheets, such as Crest Nicholson, from joining.
Source: The Guardian
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