Published by Global Banking and Finance Review
Posted on November 27, 2025
By Yadarisa Shabong and Raechel Thankam Job
(Reuters) -Demand for new homes could gradually recover next year, giving British homebuilders a much-needed boost, analysts and some investors said after finance minister Rachel Reeves' budget cleared uncertainty that held buyers back.
Shares of homebuilders, such as Berkeley, Barratt Redrow and Persimmon were about 1% to 3% higher on Thursday, having fallen on Wednesday after the budget which increased taxes on pensions and savers.
There was no change to stamp duty, the tax paid when somebody buys a home, while improving debt forecasts helped push government bond prices up, which typically leads to a more favourable lending environment for banks and lower long-term mortgage rates for borrowers, analysts said.
They also expect a new tax on homes valued over 2 million pounds ($2.6 million) to have little effect on the broader housing market.
'A GOOD FIRST STEP'
"The stability of the market (after the budget) is a good first step," said James Thorne, portfolio manager at Columbia Threadneedle Investments, an investor in the major UK-listed homebuilders.
Uncertainty over the budget has hurt sales in recent weeks, with five of the seven major listed homebuilders posting slower sales since October. The companies declined to comment on the budget.
According to data from property website Zoopla, uncertainty over the budget had led to an 8% year-on-year drop in homebuyer demand in October.
Analysts at Investec and Barclays expect pent-up demand to support the traditional spring selling season as some buyers return to the market.
NEW CHARGES ON HOMES WORTH MORE THAN 2 MILLION POUNDS
Reeves introduced an annual tax in England, starting in 2028, of 2,500 pounds for homes worth more than 2 million pounds, increasing to 7,500 pounds for properties valued at over 5 million pounds.
She also increased the tax paid by landlords on rental income.
Analysts do not believe the surcharge will hurt the sub-2 million pound market and see only a small impact from property income tax on the buy-to-let market.
"The reality is the main part of the housing market is pretty unscathed," Investec analyst Aynsley Lammin said.
Berkeley, which builds more high-end homes across London than its rivals, is likely to be hit hardest among the listed firms, Barclays analyst Rajesh Patki said in a note.
Berkeley's shares fell as much as 5% after details of the budget were unexpectedly released early on Wednesday. They were up 0.7% on Thursday.
The homebuilders sub index was last up 1%.
GOVERNMENT WANTS TO BUILD 1.5 MILLION NEW HOMES
The government last month pledged to streamline planning rules to help meet its target of building 1.5 million homes before the next election — a move investors see as more significant for the sector than Wednesday's budget.
Expectations for lower Bank of England interest rates remain unchanged following the budget, which analysts also view as supportive for affordability.
Still, some in the industry warned Reeves missed an opportunity to boost demand.
"If government fails to address the viability and affordability constraints, its housing ambitions will become increasingly unachievable," said Steve Turner, Executive Director of the Home Builders Federation.
Goodbody analyst Shane Carberry described the budget as an "okay" outcome for the homebuilders, but the backdrop remains sluggish.
($1 = 0.7562 pounds)
(Reporting by Yadarisa Shabong and Raechel Thankam Job in Bengaluru; Editing by Emelia Sithole-Matarise)
