British housebuilders are among the top fallers on the London bourse, weighed down by the prospects of less stimulus from the Bank of England and signs that politicians are becoming concerned about the possibility of a housing bubble.
Britain's Finance Minister George Osborne asked the Bank of England to play a bigger role in ensuring that his controversial "Help to Buy" housing program does not cause a new property boom. Analysts downplayed the significance of the comments for housebuilders' earnings, but markets used them as an excuse to get out of some of this year's top performing stocks.
Shares in Persimmon fell 4.5 percent, the top faller on the FTSE 100, as investors locked in profits on a near 50-percent rally since the start of the year. Mid-cap rival Bovis, meanwhile, dropped 3.6 percent.
"Housebuilders are taking quite a big hit today, they've had quite a good performance for the year-to-date and there is a bit of banking profits," said Jonathan Roy, broker at London Stone Securities.
"This is a sector that's very much supported by government policy and there has been a lot of speculation that it's turning into a bubble."
Sentiment on the housing sector was further knocked by comments from the Bank of England governor Mark Carney that he sees no need for more bond-buying stimulus given the recovering economy. The comments fanned expectations that the BoE may become the first major global central bank to raise rates.
"There is a feeling that you shouldn't own housebuilders in a rising rates environment," said Charlie Campbell, analyst at Liberum Capital.
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