The Prime Minister’s downbeat speech in Downing Street’s notorious Rose Garden has caused alarm amongst investors in the property sector, with shares falling for housebuilders, portals and kitchen companies.
Alarm
Speaking from the same spot where Boris Johnson partied during the pandemic Sir Keir Starmer painted a bleak picture of the state of the country’s finances and its £22bn black hole.
He warned that the October budget is “going to be painful” and that people must “accept short-term pain for long-term good”.
In response the FTSE 100 rose by 0.21% but investors took a very different view of the property sector.
The Prime Minister’s tough talk on things getting worse before they get better might give some households the jitters.”
With concerns over the effects of an increasing tax burden and buyer confidence, shares in housebuilder Barratt Homes fell by 6.6%, Berkeley Group’s shares were down by 4.32% and Persimmon’s by 4.31%. Rightmove’s shares fell by 1.57% and Howdens Kitchens were down by 1.06%.
AJ Bell Investment analyst Dan Coatsworth, said that despite Labour’s pro-housebuilding pledges, investors “didn’t like the tone” of Starmer’s speech.
He adds: “The Prime Minister’s tough talk on things getting worse before they get better might give some households the jitters and make them not want to get into more debt, such as taking on an expensive mortgage.
“That could have a negative impact on property market activity, hence why shares in housebuilders, property portals and kitchen companies were among the biggest fallers on the FTSE 100.”
AJ Bell is one of the largest investment platforms in the UK.
