FTSE 100 homebuilders Berkeley Group Holdings (LON:BKG), Taylor Wimpey (LON:TW), Barratt Developments (LON:BDEV) and Persimmon (LON:PSN) fell sharply on Friday morning after statistics revealed the number of EU workers entering the UK labor force fell.
A reduction in EU workers provides a headache for homebuilders who have been relying on skilled migrant workers to drive forward record completions to meet demand supported by the governments Help to Buy scheme.
Costs have been rising in the industry for sometime now and have squeezed margins despite higher average sales prices.
With recent data showing house prices in the UK are now set in a downtrend having fallen for five consecutive months, house builders face the perfect storm of falling sales prices and rising costs.
This would confirm fears from Berkeley Groups CEO who highlighted the dependency on EU workers in their recent final results.
Berkeley CEO Robin Perrrins said: “Looking forward, we remain concerned that the impact of recognised skills gap in the UK construction workforce may become more pronounced as the UK exits the European Union. While this is hard to predict, it is a fact that over half of London’s site labour comes from the EU. This needs to be addressed by a combination of continued access to EU labour, skills training and innovation in construction if the industry is to achieve its medium term production aspirations.”
London house prices have been particularly heavily hit with some areas seeing falls in the region of 15%-20%.