Shares in Britain's battered housebuilders jumped yesterday after the Government unveiled measures intended to shore up the falling housing market.
Taylor Wimpey, the country's biggest housebuilder, surged 8.5 per cent, while its rivals Persimmon and Barratt rose 10.1 and 4.8 per cent respectively. Wolseley, the bathroom and plumbing supplier, increased 5.4 per cent.
But the shares' partial recovery could be brief because much of the boost was the result of hedge funds covering short positions. The housebuilders are among the companies with the most shares out on loan, indicating large-scale speculation that further bad news from the housing market would hit the shares further.
Alastair Stewart, an analyst at Dresdner Kleinwort, said: "In terms of UK housebuilders, we would not be surprised if there is a continuation of short covering in the short term, fuelled by speculation that the current measure may actually work. But we believe any misconceptions will quickly evaporate, revealing the grim reality of a market in which virtually every housebuilder and every estate agent is a forced seller."
The Government increased the threshold for paying no stamp duty, instead of 1 per cent, to £175,000 from £125,000 for a year – the first such move since 1991. It also increased support to allow those who lose their job to keep paying their mortgage, and announced measures to ward off repossessions and supply interest-free loans to buyers of new-build properties.
The Government's measures brought no cheer for HBOS and Bradford & Bingley, the two banks most exposed to the UK property market. Shares in HBOS, the country's biggest mortgage lender, fell 2.2 per cent and B&B, the buy-to-let specialist, dropped 3.7 per cent.
Traders said the mortgage banks fell on a strong day for other UK lenders because the widely anticipated rescue package had disappointed the market.
The Treasury said the rise in the stamp duty threshold would cost it an extra £600m and that half of home transactions would now be exempt from duty. Halifax, owned by HBOS, said that if the measure had been in place over the past 12 months, 230,000 housebuyers in England and Wales would have been exempt.
Peter Bolton King, the chief executive of the the National Association of Estate Agents, said the measures were welcome, but that the raising of the stamp duty threshold would have minimal effect.
"This is not going to have the impact needed to revive the housing market as London and much of the South-east will have no effect due to the high average price of first time-buyer properties," he said.
Halifax said just 12 per cent of properties sold in London in the past 12 months were below £175,000, compared with 75 per cent in the north.Reuse content