UK housebuilders’ stocks surge on new homes scheme for first-time buyers – business live

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It is “Christmas come early” for UK housebuilders, says Anthony Codling, managing director at the broker RBC Capital Markets.

We believe that those with most exposure to the south and south east (Crest Nicholson) and the more liquid stocks (Barratt Redrow, Persimmon and Taylor Wimpey) will outperform, and those with the least exposure to open market homes (Vistry) and homes likely to be priced above the Your First Home price cap (Berkeley) to underperform on a relative basis.

That said, we believe this is the big catalyst the sector as a whole needed for a re-rating, and whilst most of us have 88 sleeps to Christmas, Christmas has come early for the UK housebuilders.

Conversations with housebuilders over the weekend indicated that while they welcomed the news, they recognise the need to discuss the practicalities of implementation in the coming weeks.

At this stage it is unclear what the income and property value caps are going to be. Even if they are relatively generous, it is likely that higher price point developers (such as Berkeley Group, not rated) benefit as much.

At this stage it is unclear what level of financial contribution the housebuilders will be required to make to participate in the scheme. If this hurdle is too high, then developer take up may be limited. Moreover, even a moderate contribution may preclude those housebuilders with stretched balance sheets (e.g. Crest Nicholson).