MARKET REPORT: British builders continue to take budget hits amid fears of higher interest rates

House prices may be rising, but investors continue to dump shares of the biggest builders.

Upbeat Nationwide figures show prices last month were 3.7 per cent higher than a year earlier, the biggest increase since November 2022.

A typical home now costs just over £268,000, according to the mortgage lender, which noted that activity in the market has been “relatively resilient in recent months despite the higher interest rate environment”.

But it has done little for stock prices, as investors worry about what those higher interest rates mean for demand for new homes.

While the Labor government has committed to driving development across the country, few believe it will achieve the target of 1.5 million new homes by this parliament.

And stocks in the sector have slumped since the Budget, pushing up borrowing costs as markets digest Chancellor Rachel Reeves’ tax- and borrowing-driven spending spree.

Analysts at RBC believe the stock has been “oversold” and say the underlying picture is not so bleak.

But while they improved Barratt Redrow and Crest Nicholson, they reduced their ratings on Persimmon, Vistry and MJ Gleeson.

Persimmon shares fell 1.3 per cent, or 16.5 pence, to 1,241.5 pence, taking losses since the Budget to 22 per cent.

Vistry, whose own problems have been highlighted by two recent profit warnings, fell another 3.9 per cent, or 25.5p, to 630.5p.

It is down more than 50 percent since mid-September. Taylor Wimpey (down 1.4 per cent, or 1.85p, at 129.15p) was caught in the sell-off and has fallen 18 per cent since the Budget.

Gleeson lost 1 per cent, or 5p, to 501p, while Barratt rose 0.3 per cent, or 1.3p, to 429p and Crest advanced 3.8 per cent, or 6.3p , up to 171.6 pence.

With political uncertainty in France making the headlines, it was a nervous start to the week, with the FTSE 100 adding just 0.3 per cent, or 25.59 points, to 8,312.89 and the FTSE 250 down 0.01 per cent. percent, or 2.52 points, to 20,769.05. .

Direct Line remains in the spotlight after it rejected a £3.3bn bid from insurance giant Aviva last week.

Over the weekend, Direct Line founder Sir Peter Wood told The Mail on Sunday that Aviva boss Amanda Blanc would have to increase the bid by “several hundred million pounds” to be successful.

He lamented what has happened to the company since he left, saying “it’s sad that it’s been managed so badly” and adding that chief executive Adam Winslow needs more time.

“He’s trying to do a good job, but it’s a three- or four-year job,” Wood said.

Winslow also spoke, telling The Sunday Times that the group “is making excellent progress in the early stages of significant change.”

Having risen 48 per cent in two days after the offer was made public last week, Direct Line shares fell 1.2 per cent, or 2.8 pence, to 232 pence yesterday, and Aviva fell down 0.1 per cent, or 0.5p, to 483.2p.

Shares in British telecommunications company Spirent Communications rose 3.8 per cent, or 6.5 pence, to 177.8 pence, as its proposed takeover by US company Keysight moved a step closer with approval regulatory in the United Kingdom, France and Germany.