‘Christmas comes early’ for housebuilders as shares surge on buyer scheme

The government plans to launch Your First Home, which could allow eligible buyers in England to purchase new-build homes with deposits of just 2.5%.

Under the proposals, the government would provide an equity loan worth 20% of the property value. Buyers would also benefit from an initial interest-free period.

The government plans to introduce household income limits and local property price caps. Ministers will reveal full details at next month’s Budget.

The scheme aims to reduce the deposit barrier facing first-time buyers. It could also boost demand for new-build homes.

Investors responded to the announcement by pushing housebuilder shares higher on Monday.

Anthony Codling, managing director at RBC Capital Markets, believes developers with greater exposure to open-market sales could benefit most.

He said: “We believe that those with most exposure to the south and south east [Crest Nicholson] and the more liquid stocks [Barratt Redrow, Persimmon and Taylor Wimpey] 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.”

Building materials companies also joined the market rally.

Shares in brick manufacturer Ibstock jumped 21% in morning trading yesterday. Marshalls, which makes landscaping and building products, climbed 12%.

The government unveiled the proposals as housebuilders contend with weaker buyer confidence and higher construction costs.

Your First Home shares some similarities with the former Help to Buy equity loan programme. However, ministers have yet to confirm the final terms.

The government expects to reveal further details, including costs and implementation, at the Budget.