Shares fall as Barclays downgrades UK housebuilders

Shares in UK housebuilders fell by up to 5% on Monday after Barclays downgraded key stocks, saying the country’s housing market was “broken”.

Berkeley’s share price lost 5.4% at one point, falling to the bottom of the FTSE 100 index, before recovering to trade at 3.727p, roughly 2% down, at midday.

Bellway fell 4% before recovering to 1.4% down at 3,646p, while Persimmon was down 2% before making up most of its losses to trade at 2,812p, down 0.7%.

50% rise in share prices

Shares in all three housebuilders have soared by more than 50% this year, partly driven by the government’s Help to Buy scheme, which has had an extra £10bn injection .

However, Barclays analyst Jon Bell said it was more of a 'Help to Sell' scheme that had benefited housebuilders by inflating prices.

He said the upcoming Budget would probably try to tackle the issue of helping the younger generation get a foothold on the housing ladder.

‘Lack teeth’

But he added: “Although measures could be impactful, history suggests that they can lack teeth (solving our ‘broken’ housing market is not easy).”

The report goes on to say the Help to Buy scheme would probably be extended, with a lowering of the £600,000 price cap outside London or a first-time-buyer-only restriction.

“In fact, we expect the government to seek more creative ways of enabling new home buying under the Help-to-Buy umbrella, fuelled by its need to stem the home ownership decline,” it notes.

“Despite this, the builders face more problems building homes than selling them and tackling the real inhibiting factor (skilled labour shortages) is less easy.”