Housebuilders took a heavy hit on Wednesday 28 October 2026. Persimmon (LSE:PSN) fell 6.9% after Chancellor John Healey's first Budget set out a first-time buyer scheme that disappointed analysts on funding and timing. Before September, a slide of that magnitude in Persimmon would have fed directly into the FTSE 100. This time, it did not, because Persimmon is no longer a member.

The FTSE 100 closed up 7.96 points, or about 0.1%, at 10,694.50. Among blue-chip members, Barratt Redrow (LSE:BTRW) carried the housebuilding pain, dropping 6.57%. Persimmon's decline instead weighed on the FTSE 250, which fell 0.3% to 24,639.26.

The September reshuffle

Persimmon left the FTSE 100 as part of FTSE Russell's September 2026 quarterly review. The company moved down to the FTSE 250, along with betting group Entain (LSE:ENT), while easyJet (LSE:EZJ) and Ithaca Energy (LSE:ITH) were promoted. The changes took effect from the start of trading on Monday 21 September 2026.

Quarterly reviews rank eligible companies by market capitalisation. When a member's value falls far enough relative to others, it can be demoted, and companies that have grown can be promoted. The result is that the FTSE 100 continually reflects the largest companies by market value, while those slipping down the rankings move into the mid-cap index.

For Persimmon, that change means its daily moves no longer feed into the FTSE 100's calculation. Funds that track only the blue-chip index no longer hold it as part of that mandate, while FTSE 250 trackers now do.

What went wrong on Budget day

The disappointment centred on the "Your First Home" scheme. It will launch next spring, funded by £4.7bn ($6.24bn) of government-backed lending, but the first loans are not expected until April 2027. Analysts said that timing misses the spring selling season, a key period for housebuilders.

The scheme's fee structure also surprised the market. Developers will pay fees ranging progressively from 1% to 4%, depending on how many homes they sell through the scheme each year, with the 4% rate applying to sales above 250 homes. One market commentator said that top rate was well above the roughly 1% the market had expected, and concluded that the subsidy would lift builders' profitability less than previously thought.

The size of the funding also drew criticism. One market commentator said: "The biggest issue is more around the level of funding and the consequent duration of the scheme." one market commentator argued that the announcement fell some way short and estimated that about £2bn a year would be needed to lift sales volumes meaningfully.

The sell-off erased gains built up since the scheme was first announced. The homebuilders index fell more than 6% after the Budget speech, reversing a rally of about 9% that had followed the September announcement. Market reports said that it was the sector's biggest one-day drop since January 2025.

Rival housebuilder Taylor Wimpey (LSE:TW.) fell 7.3%, the steepest of the three major names covered. Analysts flagged that disappointment over the total funding and timing could soften sales in the interim period before the scheme starts.

Why demotions matter, and whether Persimmon could return

Persimmon's case shows how the composition of the FTSE 100 shapes its sensitivity to domestic news. With fewer housebuilders in the index, the blue-chip benchmark is now less exposed to the sector's swings. On Wednesday, that helped the FTSE 100 hold up while the FTSE 250 fell.

Other factors also played a role. Banks rose 1.1% after the bank surcharge rose to 6% rather than the feared 8%, and energy gained 0.8% as Brent crude rose to $116.37 a barrel. These sector moves, together with the reduced weight of housebuilders, allowed the FTSE 100 to edge higher despite a sharp sell-off in property-related shares.

Entain, demoted alongside Persimmon, offers a mirror image. It rose 3.6% on Wednesday, on a day when the Budget raised machine games duty to 25% from 20%, well short of the 40% that earlier speculation had reached. Like Persimmon's fall, Entain's gain no longer counts towards the FTSE 100, so neither the pain in housing nor the relief in betting showed up in the blue-chip index through these two names.

Index membership is not permanent in either direction. Companies can be promoted back into the FTSE 100 if their market capitalisation rises enough relative to others. The next review uses a cut-off of 1 December 2026, with results announced after the close on 2 December and changes effective from 21 December. Whether Persimmon or any other mid-cap company qualifies depends on market values at that point, which cannot be predicted.

Key dates to watch

  • Thu 5 Nov 2026: Bank of England MPC decision and Monetary Policy Report, important for mortgage rates and housing demand.
  • Thu 12 Nov 2026: ONS first estimate of third-quarter GDP, a read on the domestic economy that drives housing activity.
  • Tue 1 Dec 2026: December FTSE review market-cap cut-off.
  • Wed 2 Dec 2026: December FTSE review announcement after the close.
  • April 2027: First "Your First Home" loans expected, the point at which the scheme begins to affect builders' sales.

The bottom line

Persimmon's 6.9% slide was one of the sharpest moves among UK housebuilders on Budget day, driven by disappointment over the scale, timing and cost of the government's new first-time buyer scheme. But since its September demotion, its share price no longer moves the FTSE 100.

That shift helps explain why the blue-chip index could finish slightly higher on a day when the housebuilding sector suffered its biggest drop in nearly two years. It also underlines how index membership shapes which corporate stories show up in the headline numbers.