Help to Buy four-year extension buoys housebuilders
Monday 17 March 2014
The value of Britain’s six biggest listed housebuilders rocketed by more than £700 million today as the Chancellor’s pledge to extend Help to Buy for another four years sent dealers scrambling into the sector.
George Osborne’s move will keep the first stage of the Government scheme launched a year ago — under which the taxpayer provides loans of up to 20 per cent to boost buyer deposits — running until 2020 at a cost of some £6 billion. The equity loan part of the scheme was originally due to finish in 2016.
Persimmon — the UK’s largest builder by market valuation — was the biggest beneficiary as Help to Buy accounted for 2,200 of the 11,500 homes it sold last year.
The firm’s shares rose 82p to 1395.8p or 6 per cent, adding £250 million to the company’s value. Taylor Wimpey added 5.2p to 121.1p or 4 per cent, Barratt Developments surged 16.3p to 428.5p and Bovis rose 40.5p to 895.5p.
Bellway added 57p to 1602p and Redrow 5.1p to 322.6p. Shares in Telford Homes — focused on London but not a user of Help to Buy — barely moved, adding 2.75p to 342.75p.
Gavin Jago, analyst at Shore Capital, said: “The sector had been under a little bit of pressure lately due to political risk around HTB, but Osborne’s announcement underpins a large proportion of potential sales for some time to come.
Persimmon has been one of the heavier users of the scheme because it doesn’t do anything in the M25 and has a more northern slant.”
But experts also warned over the risk of rising prices and urged the Government to speed up the planning system.
Rob Wood, chief UK economist at Berenberg, predicts double-digit house price rises this year and next: “There is a housing shortage and prices are too high. Subsidising demand will not help that.”
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