UK housebuilders in short term setback

Just a few short weeks ago it seemed that the Conservative party would storm to power with an improved majority and there would be nothing stopping Theresa May in her quest for a strong Brexit deal. Fast forward to today and we see a rejuvenated Labour Party, Conservative party in chaos and Theresa May apparently hanging by a thread. This concern and confusion has had a detrimental impact upon the UK housing market with UK housebuilders seeing their share prices fall.

Why are housebuilding share prices falling?

Housebuilding and the construction industry are expected to receive significant income, assistance and government contracts in the short to medium term. The situation has been a little clouded by the recent general election which has effectively put the Conservative party in place as a minority government. Despite the fact the Conservatives are seeking the support of the DUP it seems that no official coalition will be agreed and it will simply be on a “support basis”. As a consequence, in the ongoing political confusion there are serious concerns that housebuilding and construction projects to be awarded by the government could be delayed.

Could we see a change of prime minister?

Jeremy Corbyn, seen as something of a comical figure just a few weeks ago, is now suggesting he could still be the Prime Minister of the UK if all opposition parties were to vote against the Queen’s speech next week. Again, he has suggested he is ready to serve the country and at one point even suggested that he had “won” the election. Despite the fact that political etiquette gives the largest party in the House of Commons the chance to form a government, whether with a working majority or as a minority, Jeremy Corbyn appears keen to ride roughshod over this etiquette.

At this point it is difficult to see why the UK government would call another election although it is quite likely we will Theresa May resign in due course. Already Tory party MPs are jockeying for position with Boris Johnson seen as a front runner in the event that the position of PM became free.

Construction industry

While there are obvious concerns about a weak government, even if the Conservative party was to agree a deal with DUP, this is all getting a little too close for comfort. It is easy to understand that the government as it stands today does not want to rush into announcing new contracts, when there are more important issues on the table, but these deals will need to be clarified as some point. In reality whether it is the Conservatives or the Labour Party who head the next government they have both promised to increase spending on infrastructure and housing,

Housebuilding and construction companies will eventually receive those contracts which have been in the pipeline for some time. The UK electorate has been promised significant infrastructure spending and unless this emerges there could be a significant backlash from voters. It will be interesting to see how much money the political parties do spend, whenever and whoever gets into office, and whether they are good to their word.

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