Building Trade Showing Positive Response to Government Reforms

The building trade is giving the government a reason to smile. Following the Bank of England’s decision to cut interest rates last week, house builders Bellway, Berkeley, Persimmon and Taylor Wimpey have all released optimistic projections for the coming months.

Persimmon and Taylor Wimpey forecast the number of houses being built to reach the top end of their guidance, while Bellway commented on the increase in buyer confidence.

Combined with the proposed reforms to planning, it appears as if the Labour Government’s new strategy has successfully buoyed the sector at least in the short term. However, there are still challenges to be faced. Changes to planning rules, which are already being challenged by environmental campaigners, will take time to implement. 

Since the government took office in July, Persimmon has received planning approvals for 1,000 plots, a sixth of the total they have received so far in 2024. Prior to that in June, Berkeley cited ‘good enquiries’ as a reason to boost their predictions for 2024. While Bellway’s annual revenue did fall, it was a less significant drop than had been expected. Taylor Wimpey posted its half-year results the day before the BOE cut the rates and is expected to show positive growth in the latter half of the year as a result.

Analysts are now waiting for Barratt, one of the largest development companies operating across the United Kingdom, to release their full-year results on 4^th September. The company reduced its home building targets by 7% in July, before the new Government took office. Investors are eager to see if their figures might also be more promising in light of the changing financial climate.

Combined with increased property searches and the reduction in mortgage rates, many do feel that the new Labour Government have made significant in-roads in tackling the UK housing crisis.

(Sources: reuters.com)