U.K. Housebuilders Rise on Government Plans to Reopen Market

(Bloomberg) --

U.K. homebuilder shares outperformed on Wednesday after the government set out plans to get the industry moving again.

Taylor Wimpey Plc gained as much as 3.3%, while Berkeley Group Holdings Plc rose 1.8% as of 8:49 a.m. in London and Barratt Developments Plc climbed 1.3%, among the only gainers in the U.K.’s FTSE 100 Index, which slumped amid broader market concerns about potential second waves of the coronavirus as countries ease their lockdowns. The news also boosted estate agents, with Purplebricks Group Plc shares gaining 18% and Foxtons Group Plc up 9%.

U.K. Housing Secretary Robert Jenrick said on Tuesday that a change in guidance will mean real estate offices can open, people will be allowed to view properties and house moves can take place. Taylor Wimpey -- which had already restarted some construction -- said on Wednesday it sold 408 homes net of cancellations during the U.K.’s lockdown.

The sector has seen the gains it made following December’s general election wither away amid fears about the impact the virus will have on the economy, incomes and any appetite to buy a new home, while a desktop stress test by the Bank of England suggested last week that U.K. house prices may fall 16% because of the economic upheaval caused by the virus.

Sales offices reopening and property agents being remobilized “should provide clear evidence of the health of the housing market,” Citigroup Inc. analyst Ami Galla wrote in a note. The focus now will be on underlying house prices and the scale of any property purchase cancellations in coming weeks.

Taylor Wimpey said in Wednesday’s statement that it has seen a cancellation rate of 27% in the lockdown. That rate is still significantly below the 46% peak in the 2008 financial crisis, Liberum analyst Marcus Cole said, and likely “not as high as some investors may have feared.”

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