Housebuilders' shares open lower as markets digest election result

Shares in listed housebuilders have opened sharply lower after this morning’s shock election results, which have led to a hung Parliament and Theresa May hanging on to her premiership.

Taylor Wimpey, Crest Nicholson, Berkeley and Persimmon are among the losers, with shares heading south by an average of 3%.

Markets have been open less than an hour and investors have been spooked by the lack of certainty around the outcome of the snap election, called by May in order to shore up her side of the House of Commons as she prepared for the start of Brexit negotiations next week.

With the Conservatives gaining the most seats in the Commons but reaching no clear majority, the Prime Minister has said she does not plan to resign, while shadow chancellor John McDonnell has said his party could lead a minority government.

Speaking about the new political turmoil, Adam Challis, head of residential Research at JLL, said a coalition government would provide the economy with less stability. “The short-term impacts are uncertain and this could drag on housing market activity if clear political leadership does not emerge quickly.    

“It is likely that we will see some ministerial shake-ups in the coming days and weeks. For the most part, big changes would be unfortunate with respect to senior housing market posts, notably the loss of Housing Minister Gavin Barwell.”

It was crucial, Challis said, that the new champions of housing market policy in government “reaffirmed commitments to the current policy direction rather than to create further disruption or uncertainty”.

Greg Hill, deputy chief executive at Hill, warned of the implications of a hung parliament. “No business likes uncertainty and housebuilders like it least of all. This hung parliament and the horse-trading that will take place over housing policy to get a coalition in place means that many housebuilders will hit the pause button on their investment decisions.

“This is the exact wrong moment for a construction slow down. The country needs new homes desperately. We hope that the negotiations are concluded rapidly so that the new government is in place and ready to work with the sector to go out and get building.”

Hill said he was looking for some form of political compromise, with parties having put housing at the heart of their political ambitions throughout the election campaign. “Delivering these proposals should not be overshadowed by the impact of Brexit.

“As part of the negotiations the new government must act immediately to keep the flow of talent from the Continent open. We will not be able to deliver a million or more homes by 2022 if we don’t have a sufficient volume of skilled builders to construct them.”

Carolyn Fairbairn, the CBI’s director-general, said: “This is a serious moment for the UK economy. The priority must be for politicians to get their house in order and form a functioning government, reassure the markets and protect our resilient economy.

“Politicians must act responsibly, putting the interests of the country first and showing the world that the UK remains a safe destination for business. It’s time to put the economy back to the top of the agenda.

Elsewhere in the markets, the FTSE 100 index was showing a 1% gain this morning, while the FTSE All Share and FTSE 350 were up by nearly that figure.