MARKET REPORT: Hopes for interest rate cuts give homebuilders a boost

Shares in British housebuilders rose on hopes that faster-than-expected interest rate cuts will result in cheaper mortgages, boosting demand.

Investors piled into the sector after Andrew Bailey said the Bank of England could become “a little more activist” and “a little more aggressive” in its approach to reducing borrowing costs.

Among the first-line builders, persimmon stocks gained 1.4 per cent, or 23 pence, to 1,647 pence, Bovis Homes owner Vistry rose 1.1 per cent, or 14 pence, to 1,300 pence, Barratt Developments rose 1.4 per cent, or 6.6p, to 481.3p, Taylor Wimpey added 1.3 per cent, or 2.1p, to 165.2p and Berkeley Group rose 1 per cent, or 45p, to 4,760p.

In the second tier, Bellway rose 1.9 per cent, or 58p, to 3,130p and Crest Nicholson rose 0.2 per cent, or 0.3p, to 188.3p.

Bailey’s comments came amid signs that lower mortgage rates are being reflected in the housing market.

Real estate website Zoopla shows that agreed sales in the four weeks to September 21 were 25 percent higher than the same period last year, the steepest increase since spring 2021.

Richard Donnell of Zoopla said: “Market activity has increased and expectations of lower borrowing costs will continue to attract buyers and sellers to the market.”

In the broader market, the FTSE 100 fell 0.1 per cent, or 8.34 points, to 8,282.52 and the FTSE 250 fell 0.2 per cent, or 43.72 points, to 20,740.06.

Construction firm Galliford Try rose near a record high after annual profits rose from £10.1m to £30.9m on the back of a 27.2 per cent rise in revenue to £1.8b millions.

It proposed a final dividend of 11.5p per share, bringing the total dividend for the year to 15.5p.

The board also announced a £10m share buyback. The shares closed up 8.3 per cent, or 25 pence, at 325 pence.

British Land raised £301m by selling shares at 422p to help fund the purchase of seven business parks from Canadian investment giant Brookfield for £441m.

It returned to the FTSE 100 this week in place of Darktrace, which was delisted after its takeover by private equity, and fell 0.9 per cent, or 3.8p, to 434p.

Upper Crust owner SSP (down 0.8 per cent, or 1.3p, to 155.9p) is on track for annual profits to rise by almost a third despite a slowdown during the Games Paris Olympics.

The group, which specializes in running food establishments in travel venues, said sales in the UK and Ireland rose 9 per cent during the three months to the end of September.

The group’s sales rose 6 per cent, putting it on track to make profits of £210m to £220m, a 30 per cent year-on-year increase despite its French business struggling during the Olympics.

Shares in utility company Telecom Plus, trading as Utility Warehouse, rose 2.4 per cent, or 42 pence, to 1,816 pence after another period of double-digit customer growth.

National Grid expects to make around £70m more than originally planned from the sale of its Electricity System Operator (ESO) to the Government for £630m last month.

The ESO, which manages the UK’s electricity supply, has been renamed the National Electricity System Operator.

The extra £70m came about because the sale, initiated by the previous government, came later than initially planned. It fell 1.6 per cent, or 16p, to 1,013p.