Housebuilding stocks slump as Bellway issues Iran mortgage warning
Shares in Bellway slumped eight per cent after it warned the Iran war is causing mortgage “volatility,” as a host of leading housebuilders were dragged down with it.
FTSE 100 housebuilders Barratt Redrow, Berkeley and Persimmon were all down at least one per cent on Tuesday’s early trading, with the latter taking a two per cent dip.
On the FTSE 250, Bellway plummeted by eight per cent to 1,954p and was joined by housebuilder Vistry, which fell more than three per cent.
This leaves the housebuilder down nearly thirty per cent in the year so far.
Bellway’s stock slump came after its boss warned the Iran war is shaking an already fragile housing market.
Chief executive Jason Honeyman said: “The ongoing conflict in the Middle East heightens the risk of both inflationary cost pressures and an impact to customer demand, and we have already seen volatility return to the mortgage market.”
The market reaction came despite Honeyman insisting his firm is on track for its £320m profit target despite the knock-on effects of the Middle East conflict.
Bellway built 4,702 homes in the first half of this financial year, up 2.7 per cent from the year before, but pre-tax profit fell by 0.6 per cent to £140m.
Anthony Codling, managing director at RBC Capital Markets, said: “Bellway’s view is that affordability is holding back the UK housing market and that if the UK Government wants to make meaningful headway against its ambitious housing targets it must make a commitment to introduce financial support for first time buyers.”
The government has pledged to build 1.5m homes by the next general election but the construction industry has warned Labour will miss its target due to the taxes and costs they say are hampering housebuilding productivity.
Construction to take hit from Iran war
Bradley Kay, co-founder of construction-specialised equity firm Peak Capital, warned the conflict is likely to disrupt building projects and put firms into the red.
He said: “The construction sector is uniquely exposed to energy inflation because it gets hit multiple times. You have factory energy for producing materials, fuel for transporting those materials and then energy consumption on site.
“When all three increase simultaneously, the financial impact is severe and immediate.”
Tuesday’s market spook is the latest in a period of uncertainty around the UK’s housebuilding firms, after shares in Vistry plummeted as much as 22 per cent when its boss quit earlier this month.
The outbreak of war in Iran prompted lenders to pull mortgage deals at the fastest rate since the 2022 Liz Truss mini-budget.
The number of deals on the market has now shrunk by nearly a fifth since war broke out, with 744 deals having vanished since the first US-Israel strikes on Iran three weeks ago.