Housebuilders are leading gains in the London stock market today, with investors piling into a sector that tends to benefit in post-crisis periods.
Barratt is 4.8% ahead, Berkeley Group has added 4.4% and Persimmon and Taylor Wimpey both rose 3.2%.
The Financial Times reported that the government is working on plans to extend the Help to Buy scheme beyond its December deadline. It allows people in England to buy a new-build home with a deposit of as little as 5%; the government provides a further 20% equity loan (in London, up to 40%). The scheme, first introduced in 2013, has boosted house builders’ sales and has also been criticised for pushing house prices higher.
Joshua Mahony, senior market analyst at online trading platform IG, says:
With the recent stamp duty holiday expected to spark a resurgence in demand, speculation over the potential measures such as a help-to-buy extension adds yet another string to the bulls bow.
Fears surrounding a potential spike in bankruptcies and job losses remain an issue for banks, yet the housing sector still has the opportunity to enjoy a particularly strong period as previously hesitant movers finally take the plunge thanks to government incentives.
Alongside the stamp duty holiday, Johnson’s promise to relax planning restrictions for new builds, and invest £12bn in 180,000 affordable homes goes to highlight the boom that could be ahead for the sector.
But the stamp duty cut has only really benefited wealthier buyers in London, says the property website Zoopla.
Our economics correspondent Richard Partington writes:
In a reflection of the disproportionate benefit for wealthier buyers, the property website said that agreed house sales in the capital jumped by 27% in the first two weeks of the stamp duty holiday.
The tax, which is paid by homebuyers, was temporarily removed on properties up to £500,000 in England and Northern Ireland by Rishi Sunak as the centrepiece of his summer financial statement this month.
Designed to boost housing transactions and demand for goods and services related to moving home – such as estate agents, solicitors, removals and the building trade – the tax holiday is set to last until 31 March 2021, at a cost to the exchequer of £3.8bn.
In its monthly assessment of house prices and property sales, Zoopla said the change had less of an impact on regional housing markets than in London. “This boost to transaction volumes has not been replicated in other regions, where average property prices are lower and less responsive to stamp duty amends,” the property website said.
“While stamp duty relief will support demand in higher value markets [on property priced up to £500,00] across southern England, it is unlikely to sustain demand indefinitely into 2021,” it added.
