Has Rachel Reeves helped or hindered her cause with the cryptic 'pressers' and interviews she's given ahead of the Budget later this month? Only time will tell. Certainly, it seems to have heightened speculation, rather than tamped it down, particularly around tax hikes.
Against this backdrop, Citi has weighed in - but not on the obvious subject matter. The American bank the UK’s housebuilders could be in for a boost when the Chancellor steps up to the dispatch box on 26 November.
In a new sector note, the bank argues that a “sluggish-growth, lower-rates” environment post-Budget would be the sweet spot for builders, even if the industry must stomach some tweaks to property taxes.
Citi reckons the market’s already pricing in plenty of gloom, with housebuilder shares trading at around 0.9 times forecast 2026 book value, a clear reflection of the UK’s fiscal hangover.
The upside? If Jeremy Hunt manages to steady the public finances and rekindle confidence in rate cuts, Citi thinks that could trigger a sector re-rating and lift valuations closer to their long-term norms.
In short, fiscal credibility now could lay the foundations for a housing market revival later.