UK listed house builder shares off to a slow start this week - most handing back gains picked up at the end of last week.
St. Modwen was the biggest loser, dropping almost 2%, with Crest Nicholson, Redrow, Bellway, Countryside, Persimmon, McCarthy & Stone and Barratt losing more than 1% of their share value on the day.
While underlying fundamentals are sound and recent figures and trading statements have indicated that demand is strong and sales are holding up well, stock market investors and speculators still seem wary of house builder shares.
Perhaps the market is waiting for the Chancellor's Autumn Statement on Wednesday, but this is unlikely to contain many surprises. The government is still committed to encouraging home ownership and the building of more houses. There will likely be some announcements (or re-announcements) of infrastructure spend and a re-affirmation of government commitment to house building, but there is unlikely to be much that the government can do to accelerate house building in the short term.
The much discussed skills gap is the main constraint to increased productivity right now and while this won't be solved overnight, the industry is waking up to the lack of investment in training in recent years. However, as shortages in specific areas drive up wages, many positions will become more attractive to new entrants and returnees to the industry, while increasing adoption of modern methods of construction such as offsite modular building, new materials and automation can also help with improved productivity and faster builds.
Longer term, changes to the planning process to make more land available and speed up the process would have the biggest impact on accelerating delivery of the houses that are required. However, radical change to planning legislation is likely to be time-consuming and politically challenging.
It seems everyone is in agreement on the need for more house building. Politicians on both sides say we need more; builders want to build more and there is good availability of development investment to fund more housing across all sectors.
It remains to be seen whether there is the political will to deal with the obstructive, slow and expensive planning process that is clearly the main impediment to delivering the number of homes the country needs.
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