UK housebuilders’ stocks surge on new homes scheme for first-time buyers – business live

It is “Christmas come early” for UK housebuilders, says Anthony Codling, managing director at the broker RBC Capital Markets.

We believe that those with most exposure to the south and south east (CrestNicholson) and the more liquid stocks (BarrattRedrow, Persimmon and TaylorWimpey) will outperform, and those with the least exposure to open market homes (Vistry) and homes likely to be priced above the Your First Home price cap (Berkeley) to underperform on a relative basis.

That said, we believe this is the big catalyst the sector as a whole needed for a re-rating, and whilst most of us have 88 sleeps to Christmas, Christmas has come early for the UK housebuilders.

Shares in building material suppliers are also joining housebuilders in their market rally this morning – brick-maker Ibstock has jumped 21%, while Marshalls, which makes hard landscaping and building products,is up 12% this morning.

Construction material suppliers Forterra and Breedon are up 14% and 9% respectively. Topps Tiles is up 6%.

Adrian Kearsey, an analyst at the broker Panmure Liberum, notes there are still few details on how exactly the scheme will work. He wrote this morning:

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.

He adds that the key winners 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%).

At this stage it is unclear what the income and property value caps are going to be. Even if they are relatively generous, it is likely that higher price point developers (such as Berkeley Group, not rated) benefit as much.

At this stage it is unclear what level of financial contribution the housebuilders will be required to make to participate in the scheme. If this hurdle is too high, then developer take up may be limited. Moreover, even a moderate contribution may preclude those housebuilders with stretched balance sheets (e.g. Crest Nicholson).

Introduction: UK housebuilder stocks soar on new homes scheme

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

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 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 AndyBurnham unveiled plans over the weekend for a new help-to-buy scheme.

The programme, called “Your first home”, is intended to help buyers in England who have a regular income but have been 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 would be 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.”