Labour Party Victory Boosts British Housebuilders, Promises 1.5 Million New Homes

British housebuilding companies saw significant gains on the FTSE 100 following the Labour Party's election victory. The party's manifesto promises to build 1.5 million new homes over the next five years and to reform the planning system. Key beneficiaries include Persimmon, Taylor Wimpey, and Vistry.

British housebuilding companies were the top gainers on the FTSE 100 on Friday as investors welcomed the election victory by the Labour Party, which said it wanted 1.5 million new homes to be built over the next five years. Housing was a key part of the Labour Party's election manifesto, in which it promised to speed up home building by reforming the country's planning system.

"If election pledges turn into policy, today is more than just a new day in housebuilding, it is the dawning of a new age," said RBC Capital Markets analyst Anthony Codling. Persimmon, Taylor Wimpey and Vistry are expected to be key beneficiaries of an increased focus on boosting affordable homes and planning reforms.

Shares in Persimmon, Taylor Wimpey, Vistry and Barratt rose between 2% and 3% and were the biggest gainers on the FTSE 100 and among the top across Europe. The UK homebuilders index jumped 2.2%.

Analysts said they expect the new government in the next 100 days to restore housing targets, reform the planning system, refine the greenbelt and increase social and affordable housing. Other housing-related stocks also jumped on the news, with largest building materials supplier Travis Perkins, Howden Joinery and brick companies Forterra and Ibstock all climbing between 1.5% and 3.3%.

Housebuilders had pointed to weak sales for most of last year, even during the traditionally strong spring selling season in 2024, and have swiftly responded to the slowdown by scaling down home-build targets and slashing profit forecasts. In their attempt to revive demand, they have offered a wide range of incentives, putting further pressure on margins.

JP Morgan analysts said potential interest rate cuts in August will also spur more appetite for the sector.

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