Housebuilder shares rally on Iran war peace hopes and help-to-buy revival
Shares in leading London’s listed housebuilders jumped on Monday as investors bet a potential Iran war peace deal and a mooted new help-to-buy scheme would provide a boon to Britain’s flagging property market.
FTSE-100-listed Persimmon jumped more than four per cent to 1,152 while mid-cap Vistry gained six per cent to 310p on Monday.
Analysts pointed to renewed hopes of a Middle East peace deal and rumours that the government is reviewing measures to boost demand for homes as reasons behind this uptick in housebuilding stocks.
Shares in the UK’s housebuilders have slumped since the Iran war broke out in February as they contend with soaring building costs and falling consumer confidence.
Leading firms have slammed the brakes on construction and landbuying in a bid to shore up their balance sheets. Vistry revealed a £30m first-half loss in June, while Taylor Wimpey slashed its dividend and cut its house completion targets last week.
Anthony Codling, an analyst at RBC Capital Markets, told City PM that renewed prospects of an Iran peace deal would “lead to a reduction in mortgage rates, aiding housing affordability and demand”.
US President Donald Trump said on Monday that a deal to end fighting in the Middle East is “imminent”. He told reporters: “I’m not looking to kill people.”
Alongside Persimmon, FTSE 100 housebuilder Barratt Redrow also jumped on Monday morning, gaining three per cent. Berkeley gained nearly three per cent to 3,594p and Bellway surged four per cent to 2,076p.
Codling said reports that the government is considering reviving the Help to Buy equity loan scheme could also have lit the fire beneath London’s housebuilding stocks.
“A return of Help to Buy would, clearly, be welcome news for all the mainstream housebuilders and lead, in our view, to share price outperformance,” he said.
Housebuilders urge Burnham to boost demand
Housing minister Matthew Pennycook is “actively reviewing” a return of the scheme, which offered loans to help first-time buyers onto the housing ladder, The Times has reported.
The scheme was axed in 2023 amid fears it inflated housing prices but it has returned the Treasury a £1.74bn profit so far.
A spokesperson for the Ministry of Housing, Communities and Local Government sought to downplay rumours that the scheme will return, saying: “There are no current plans to introduce a new Help to Buy scheme.”
Steve Turner, executive director of the Home Builders Federation, said: “If [the] government is serious about housing it surely has to do something to kickstart the market.”
Turner called on Labour to publish its review of Help to Buy in a bid to dispel the “myths” that the scheme inflated house prices – which he said “have no basis whatsoever”.
A spokesperson for Taylor Wimpey told City PM it would encourage measures by Burnham’s government to “unlock demand and support housing delivery”.
Russ Mould, investment director at AJ Bell, said that it is “perfectly possible” that hopes of a new Help to Buy scheme and renewed optimism of a US-Iran peace deal are fuelling a housebuilder rally.
“The builders have been terrible performers and many of them now trade below tangible book value per share, so it may not take much good news to prompt some investors to take a second look,” he said.