Shares in housebuilders are in retreat as the Budget fails to deliver the kind of radical changes to planning or extended financial support desired by the market.

Although Chancellor Philip Hammond pledged £44bn to help build 300,000 homes a year by 2020, a lack of detail has gone down poorly with investors.

In particular, there was no comment on extending Help to Buy. There was also vagueness in terms of planning changes and an investigation into why housing starts are lagging planning permissions (potentially implying housebuilders may be hoarding land).

The latter could have an impact on MJ Gleeson (GLE) which, as well as building low-cost homes in the North of England, also buys and sells land in the South.

Following the Budget announcement, housebuilders Barratt Developments (BDEV) leads the sector lower with a fall of 2.9% to 615p with Persimmon (PSN) also down by 2.2% to £26.15.

WHAT WAS ANNOUNCED ON HOUSING?

There were some brighter spots for the sector, including investment in delivering a skilled construction workforce and no stamp duty for first time buyers on homes worth £300,000 or less.

The changes to stamp duty could also be good for estate agents if they encourage more prospective buyers to go ahead with purchases. The UK’s leading agent Countrywide (CWD) saw its shares rise 3.4% to 114.75p following the Budget announcement.

Pumping £1.1bn into a scheme to support private developers in progressing strategic sites including regeneration projects could benefit civil engineering firms like Keller (KLR) and  Kier (KIE).

Staying on the housing theme, Hammond’s pledge to ensure councils have the resources to make buildings fire safe – a response to the Grenfell tragedy – could be beneficial to Marlowe’s (MRL:AIM) fire testing business and sprinklers specialist Premier Technical Services (PTSG:AIM).

CRUDE AND CIDER

A change to allow tax losses associated with oil and gas fields to be transferred when those assets are bought and sold was welcomed by North Sea operator EnQuest (ENQ).

‘If drafted in the right way, these measures will be another positive step by Government in increasing the investability of the UKCS (UK Continental Shelf),’ says chief executive Amjad Bseisu.

The leisure sector will welcome the freeze in alcohol duties for 2018; however the Chancellor did indicate a plan to increase duty on ‘cheap, high strength, low quality products’ from 2019, namechecking ‘white ciders’ in particular.

Brewer C&C’s (CCR) White Ace product falls into this category and any duty hike could also impact customer habits at Conviviality’s (CVR) Bargain Booze franchise.

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Issue Date: 22 Nov 2017