LIVE MARKETS-British budget a clearing event for homebuilders, say Goldman

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com.

BRITISH BUDGET A CLEARING EVENT FOR HOMEBUILDERS, SAY GOLDMAN

Goldman have initiated coverage on British homebuilders, with buy ratings on Barratt Redrow BTRW.L Persimmon PSN.L and Vistry VTYV.L seeing upside in a sector about which there is an awful lot of doom and gloom.

The British government wants 1.5 million homes built before the next election, due in 2029, but figures from the Office for Budget Responsibility earlier this year forecast it will fall short.

Part of Goldman's optimism on the sector is a result of a simple macroeconomic point - they anticipate more Bank of England rate cuts next year, which would help mortgage costs to fall and house prices to rise.

They see mortgage rate declines of roughly 80 basis points by December 2026.

There's the uncertainty from the endlessly-discussed British budget, but that is nearly over, and Goldman reckon it could be a "clearing event" allowing market focus to shift back to mortgage costs.

And with price-to-book ratios at 10-year lows based on the bank's calculations, they see scope for meaningful upside.

The market reaction to the note has been mixed. Vistry's shares are up 4.7%, but Barratt Redrow and Persimmon are each up just over 1%. Those three are the top gainers of the FTSE350 housebuilder index today. .FTNMX402020

(Alun John)

EARLIER LIVE MARKETS POSTS:

CHEAPER GLP-1 DRUGS COULD PUT PACKAGED FOODS ON A CRASH DIET SAYS PIPER SANDLER CLICK HERE

EYES ON PEACE TALKS CLICK HERE

EUROPE BEFORE THE BELL: CATCH UP AND THEN WHAT? CLICK HERE

MORNING BID: HOLIDAY WEEK COULD BE PRIME TIME FOR YEN INTERVENTION CLICK HERE