MARKET REPORT: Housebuilders rise as Government eases visa rules for construction workers in bid to plug labour shortages

Housebuilders rallied as hopes grew that a relaxation in visa rules could plug labour shortages, reduce building costs and improve margins.

The Home Office this week added bricklayers, roofers, tilers, carpenters, joiners and plasterers to the Shortage Occupation List in a bid to make it easier for construction companies to recruit overseas workers.

Such measures are expected to ease pressures on London-listed housebuilders.

Danni Hewson, head of financial analysis at AJ Bell, said: ‘The Government’s decision to temporarily relax restrictions to allow more overseas builders to fill construction gaps in the UK will be a boon to housebuilders.

‘Labour costs have sky-rocketed and projects have been left idling because of a lack of tradespeople.

Recruitment drive: The Home Office this week added bricklayers, roofers, tilers, carpenters, joiners and plasterers to the Shortage Occupation List

‘Delays are costly and, with house prices coming under increasing strain from higher mortgage rates, any potential to bring down overheads and protect waning margins will be grabbed on to with relish… Investors haven’t had much to feel optimistic about from the construction sector over the last few months so any good news is being seen as an opportunity to bag a bargain with share prices looking pretty subdued compared with this time last year.’

Shares in Persimmon gained 4.3 per cent, or 45p, to 1092p, Taylor Wimpey climbed 4.6 per cent, or 4.8p, to 108.9p and Barratt Developments added 3.9 per cent, or 15.9p, to 424.3p.

The FTSE 100 rose 0.6 per cent, or 47.27 points, to 7453.69 and the FTSE 250 was up 1.2 per cent, or 213.79 points, to 18618.22.

Books continue to fly off the shelves for Harry Potter publisher Bloomsbury. The company hailed a ‘good performance’ as it revealed sales in the four months to the end of June were 9 per cent higher than a year earlier.

JK Rowling’s Harry Potter series continued to be among its best-sellers over the period along with fantasy novels by Sarah J Maas.

Stock Watch – Pelatro

Pelatro  shares plunged to a record low after it warned it needed fresh funds following a series of payment delays and disputes.

The marketing software company launched a review into the payments it was owed after one of its key customers said it would miss the deadline to repay £420,000 this month.

Pelatro is waiting to be paid around £840,000 from four customers in Nepal, Myanmar and Bangladesh.

Shares plunged 48.8 per cent, or 3.9p, to 4.1p.

Bloomsbury suggested it remains on course to deliver revenues of £273million and profits of £32.5million in the 12 months to the end of February 2024, in line with expectations. But shares still fell 0.5 per cent, or 2p, to 440p.

Retirement specialist Just Group had its best day on the stock market since March after it cashed in on higher interest rates. 

That helped the company’s retirement income sales more than double to £1.9billion in the six months to the end of June.

Just added that it remained on course to increase its profits by an average of 15 per cent each year over the medium term. Shares gained 9.5 per cent, or 7.3p, to 84.5p.

Payments firm Wise also benefited from interest rate hikes as its income jumped 66 per cent to £311million in the three months to the end of June. 

Active customer numbers soared 33 per cent to 6.7m. Account balances reached £11.5billion, with Wise earning an interest income yield of 3.4 per cent during the period compared to 2.8 per cent at the end of the previous quarter. Shares added 5.9 per cent, or 39.8p, to 712p.

Dowlais also made gains after brokers Jefferies raised its target price to 175p from 155p.

Shares in the engineering group, which was spun out of industrial investment giant Melrose (up 2.3 per cent, or 11.4p, to 511.4p) and listed in April, rose 4.4 per cent, or 5.2p, to 122.7p.

Polymer maker Synthomer headed in the other direction after it warned customer demand was unlikely to improve before the end of 2023.

It said its results for the six months to the end of June, where it expected to have made £1.1billion of revenue and a profit between £72million and £74million, were broadly in line with market forecasts. Shares fell 8.6 per cent, or 6.9p, to 73.1p.