Shares of the UK’s largest housebuilders rose Tuesday morning after Prime Minister Andy Burnham announced a £10 billion plan to build thousands of affordable homes across England.
The funding, revealed late Monday, represents the first portion of a £39 billion social and affordable housing program. Burnham stated the money would provide homes at social rent levels in areas with the longest waiting lists.
Vistry Group led the gains, climbing over 12% to 301p in early trading. The FTSE 250 company, which has faced heavy short-selling recently, received £350 million from the government to construct 3,000 affordable homes as part of the initial package.
Vistry CEO Adam Daniels welcomed the announcement. “We are delighted that Homes England has made this significant announcement that will create over 73,000 new homes,” he said.
The buoyant reaction to the government’s housebuilding plans comes despite a watering-down of Burnham’s initial plans for the scheme. He had previously said that all of the Labour’s £39bn social and affordable homes programme should be “dedicated to council homes”. But the announcement will see the money spent on a mix of subsidised housing types, in line with previous commitments by Burnham’s predecessor Sir Keir Starmer.
A further £6 billion will later be set aside for London, where demand and building expenses are highest. The £10 billion in funding set out on Monday night will be spent on building 70,000 homes outside London, with about 60 per cent of this money earmarked for social rented housing.
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Builders reduce spending as market weakens
The housing sector has faced declining demand and increasing costs, worsened by economic effects from the Iran war. Vistry reported a £30 billion first-half loss in an unscheduled trading update last month, unsettling investors.
Other major builders have also scaled back. Barratt Redrow, which gained nearly 1% Tuesday, has limited land purchases because of “heightened macroeconomic uncertainty.” Berkeley Group, up 2% to 3,594p, stopped buying land entirely in April after warning about “an unprecedented rise in cost and regulation.”
Some firms have urged Burnham to reduce stamp duty for first-time buyers to stimulate demand. The government has described the programme as the largest council housebuilding effort since the postwar period.
For Vistry, which focuses on partnerships with local councils and housing associations, the funding provides a rare positive development.
The £10 billion will support 70,000 homes outside London, with construction set to begin soon.
Market stability has also been a focus elsewhere, as geopolitical tensions continue to influence trading conditions.