U.K. homebuilder stocks fell sharply Wednesday after market leader Barratt Developments (BTDPY) told investors it had slashed prices for newly built properties in London as it seeks to counter a moribund market for premium property.
The London-listed developer of residential homes delivered what was a broadly positive set of first-half results, but investors took issue with the warning of challenges ahead in the British capital, where Barratt and many other developers have a large exposure.
Barratt stock dropped by nearly 3%, to 470.4 pence, in response to the news. It is down by 25% for the year to date.
But more broadly, the group said Wednesday that its average sales rate rose to 0.74, from 0.71, during the six months to November 13. Forward-sales were up 4% to £2.65 billion ($3.2 billion) and management said the business is on track to reach gross-margin and return-on-capital-employed targets of 20% and 25% for the year.
Wednesday's report draws to a close the first round of results to emerge from the sector since the U.K. voted to leave the European Union on June 23, which prompted a sharp sell-off in the sector.
Investors have been cautious of real-estate developers for some time, since the government began a program of property sales-tax hikes in 2015, while the threat of political instability may also have helped to deter some overseas investors.
The majority of homebuilder stocks fell Wednesday in London in concert, shedding between 1% and 3.5% of their value, with the London-centric Berkeley Group being the second-largest decliner after Barratt.