Shares in UK house builders were hit hard on Friday after Britain voted to leave the European Union in a historic and bitterly fought referendum.
Shares in the national house builder Persimmon were down 26.98% at around 1pm local time, the worst hit of all stocks on the benchmark London index. Taylor Wimpey shares had lost 24.58% of their value, Barratt Development was down 22.53% and Berkeley Group had fallen 22.10%.
The four stocks were among the five biggest decliners on the FTSE 100 index, which was overall down around 4 percent, following a sharper decline in early trading. The value of the pound fell almost 8 percent against the dollar.
Liberum analyst Charlie Campbell said that the uncertainty following the ‘Brexit’ vote is particularly damaging for house builders.
“The debate over what the EU referendum means for the outlook for the UK will last much longer than today, but for now we offer the conclusion that the outcome is bad for housebuilders’ shares as the combination of slowing GDP, rising longer term rates and political uncertainty is like Kryptonite for that group of shares,” Campbell was quoted as saying.
The London Central Portfolio (LCP), a residential investment advisor, on Friday forecast a “two speed” impact on the UK property market following the Brexit vote. While the domestic market may “suffer from the reverberations of the vote”, the prime Central London market is likely to benefit from it.
“Prime Central London real estate is expected to benefit from a flight to quality and the security of blue-chip tangible assets, against a background of highly volatile financial markets,” said Naomi Heaton, CEO of LCP.
“It is now likely that property prices in Prime Central London will increase. Whilst LCP had originally predicted that this would not occur until 2017, the signs are that the re-entry of investors into the market will be more rapid than originally expected. LCP have received a stream of enquiries from the early hours of this morning.”