Homebuilder Shares Update
On Sept. 26, 2026, UK Prime Minister Andy Burnham announced Your First Home, a new equity loan scheme in England targeting first-time buyers. Listed UK homebuilders have been crying out for demand stimulus to replace Help-to-Buy, which closed to new applicants in 2022.
Why it matters: Homebuilders have faced a perfect storm of headwinds in recent years, including significant build cost inflation, an unwieldy planning system, and stretched affordability compounded by rising mortgage rates, which have decimated volumes and margins.
- Accordingly, this has led to a substantial shortfall in the number of homes being built relative to government targets, and the announcement comes as a relief to the sector.
- Your First Home is a narrower scheme than Help-to-Buy originally was; it’s expected to support 2.5% deposits with a government-backed equity loan for up to 20% of the property’s value, initially interest-free, and only applies to first-time buyers of new-build homes from participating developers.
The bottom line: We await further details in the October UK budget before updating our estimates across our coverage, but we expect the biggest and quickest effect to be on private reservation rates, with the scheme bringing first-time buyers who can afford a mortgage but not a deposit into the fold.
- With preregistration opening by the end of the year, we expect reservation rates to pick up from early 2027, feeding into completions and earnings in the second half. We expect homebuilder margins to benefit from less discounting and fewer bulk sales.
- We highlight our preferred stocks Persimmon and Barratt Redrow. Persimmon has the lowest average selling price and the highest exposure to first-time buyers, and is therefore very well placed to benefit from this scheme, whilst Barratt Redrow trades at an excessive discount to the peer group.
