UK housebuilding stocks saw a significant rise on Friday after the Labour Party won a landslide victory in the general election. This win is largely attributed to Labour's commitment to enhancing housebuilding and implementing urgent pro-development planning reforms.
Major housebuilders experienced notable stock increases: Persimmon rose by 2.2%, Vistry by 3.4%, Barratt Developments by 2.4%, and Taylor Wimpey by 2.8%.
Labour's pre-election promises included delivering 1.5 million new homes over five years and reestablishing firm housing targets for local governments, which were previously made advisory under the Conservative administration.
Key to Labour's housing strategy are:
- Reinstating hard housing targets for local governments.
- Reviewing greenbelt boundaries to facilitate development around major cities.
- Rapidly identifying sites for several large-scale “new towns.”
However, achieving these targets is challenging. Labour aims to build an average of 300,000 new homes per year, a figure not seen since the mid-1970s. This comes amidst high interest rates which have slowed down home purchases, making the target even more daunting.
Housebuilders are expected to push for more support for first-time buyers, beyond Labour's commitment to maintain an existing mortgage guarantee scheme. Chronic underdelivery of new homes has led to house prices rising beyond reach for many and a shortage of rental properties.
