23 September 2022

Housebuilders boosted by stamp duty cuts and moves to free up planning

23 September 2022

Housebuilders have seen shares lift higher after the Chancellor’s move to slash stamp duty and reform Britain’s planning system.

Vistry – formerly known as Bovis Homes – and rivals Countryside and Crest Nicholson enjoyed solid gains in the FTSE 250 Index after Kwasi Kwarteng revealed a boost for homebuyers and developers in his mini-budget.

Shares in Vistry lifted more than 2%, while Countryside and Crest Nicholson both added 1% and Newcastle-based Bellway also lifted higher.

FTSE 100 builders Persimmon, Barratt Developments and Taylor Wimpey gave back initial share gains on the announcement as the wider top flight of shares tumbled to its lowest in two months.

Having initially risen by around 2%, the builders were hampered by the wider blue chip woes, with Charles Church owner Persimmon later seeing shares remaining flat, while Barratt and Taylor edged lower.

We have seen proposals of this nature come forward before many times, only for them to be kicked into the long grass

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Housebuilders have been clad with a rosy glow on the markets today, after the stamp duty cut confirmation and the prospect of more acquiescent planning departments on the other.

“But these measures are not likely to help stave off a correction in prices indefinitely.

“There is the potential that changing the criteria for new developments, allowing companies to build fewer low-cost units, could push up overall house prices even further, with more high-end homes likely to be built.

“As rates rise further, and people find prices increasingly unaffordable, the market is still likely to stumble.”

It is hoped that Mr Kwarteng’s move to cut stamp duty will offer support for first-time buyers and those on lower incomes and help stimulate wider demand.

Experts said proposals to bring forward a new Bill to unpick planning restrictions and create new investment zones should help see housing supply match increased demand.

Stuart Law, chief executive of the Assetz Group of property and financial services companies, said: “The only way to truly support the housing market long term is to stimulate supply so it better balances demand, with affordability as the natural outcome.

“In that sense, the proposals announced by the Government to reform the planning system are exactly what’s needed, just not in tandem with a huge demand stimulus at a time when it is already impossible for the housing sector to keep up with demand at its current level.”

But he cautioned over fears in the industry that the latest proposals will fall by the wayside as previous plans have.

He said: “We have long needed an overhaul of our overbearing planning system, which dramatically restricts our ability to build more homes.

“The planning reforms proposed today should therefore be broadly welcomed, although we have seen proposals of this nature come forward before many times, only for them to be kicked into the long grass.”

The best videos delivered daily

Watch the stories that matter, right from your inbox