UK housebuilder stocks are flying this morning as investors rejoice at a new homes scheme for first-time buyers in England.
Shares in Barratt Redrow have surged by 14%, making it the best performer across the FTSE 100. Housebuilders are dominating the FTSE 250 index, too, with Vistry, Persimmon, Taylor Wimpey and Bellway all up between 14% and 16% this morning.
It comes after Andy Burnham unveiled plans over the weekend for a new help-to-buy scheme. The ‘Your first home’ programme aims to help buyers in England who have a regular income but are unable to save for a large deposit or don’t have financial support from their family.
Under the scheme, first-time buyers will get a 20% equity loan to help them buy a new-build home, with an initial interest-free period and a requirement of a minimum deposit of just 2.5%.
There will be household income caps and a deposit cap to exclude those on the biggest salaries and with big savings pots. There will also be price caps on the value of the properties.
Richard Hunter, head of markets at the broker Interactive Investor, said the new policy offers a welcome boost for the industry.
“The housebuilding sector has been beleaguered by a raft of headwinds ranging from higher mortgage rates and strained affordability to a slow planning process for new homes and the announcements have provided a rare and overdue relief rally from investors.”
Anthony Codling, managing director at the broker RBC Capital Markets, was even more emphatic, declaring it as “Christmas come early” for UK housebuilders.
However, Adrian Kearsey, an analyst at the broker Panmure Liberum, notes there are still few details on how the scheme will work. He wrote: “Conversations with housebuilders over the weekend indicated that while they welcomed the news, they recognise the need to discuss the practicalities of implementation in the coming weeks.”
The winners, he says, are likely to be housebuilders with a lower price product, such as MJ Gleeson (which has shot up 19% this morning) and Persimmon (up 16%).
Shares in building material suppliers are also booming – brick-maker Ibstock has jumped 21%, while Marshalls, which makes hard landscaping and building products, is up 12%. Construction material suppliers Forterra and Breedon are up 14% and 9%, respectively. Topps Tiles is up 6%.
Today’s key events
• Today: Labour party conference day 2
• 7am BST: Aldi full-year results
• 11am BST: MPC member Dave Damsden speaks on quantitative tightening.
We’ll be tracking all the main events throughout the day on our business live blog …
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