The share prices of UK housebuilders increased on Friday following Labour’s landslide victory in the general election.
Vistry, Persimmon, Taylor Wimpey, Barratt and Berkeley were among the housebuilders that ended the day up between 2-3% higher on the back of Labour’s plans to build new homes.
During the election campaign, Labour vowed to address the housing supply shortage in tis country, with a promise to build 1.5 million homes over the next parliament.
The party has pledged to reform the planning system, with the new chancellor Rachel Reeves telling the press over the weekend that planning reform was “front and centre” of Labour’s plan to grow the economy.
In order to build the 1.5 million homes and the energy infrastructure that Labour has committed to, “we need to change how our planning system works – speed it up, stop the bureaucracies that are tying up investments in red tape,” she said.
Analysts RBC Capital Markets said in a note that they would be watching to see if the new government’s “walk matches its talk”.
“In the very short term we suspect that the talk alone will be enough to lift share prices,” RBC said.
The share price rise comes as the UK’s biggest mortgage lender Halifax said mortgage costs are still the biggest challenge facing homebuyers and those coming to the end of fixed-term deals
Anthony Codling, head of European housing and building materials for investment bank RBC Capital Markets, said: “The Labour Party has won a big majority and has big plans for housebuilding. If election pledges turn into policy, today is more than just a new day in housebuilding, it is the dawning of a new age. In the next 100 days we are likely to see the reinstatement of housing targets, the refining of greenbelt and the reform of planning, and by the end of the year the newest version of Labour may have announced a new generation of new towns.
“Over the last few years housebuilders’ potential has been hamstrung, but over the next few this potential is likely to be unleashed. If the new government’s walk matches its talk we expect the sector to re-rate, and in the very short term we suspect that the talk alone will be enough to lift share prices.
“In our view, whilst all housebuilders benefit from the anticipated changes the biggest winners will be Taylor Wimpey, Persimmon and Vistry.”
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