Shares in house builders were boosted by Chancellor George Osborne's plans to help 100,000 struggling young families buy newly built homes and provide a 400 million pound fund to help construction firms kick-start projects.
Osborne said Tuesday the government would take advantage of its borrowing costs being at a record low to provide a mortgage guarantee scheme to help first-time buyers who do not have the finances to put down deposits on homes.
The government can use the low interest rates we've secured to help young families who want to buy a home but can't afford the very large deposits that banks are now demanding. We will use mortgage indemnities to help 100,000 such families buy newly built homes, Osborne said in his autumn budget statement.
Shares in Persimmon
I think the mortgage indemnity guarantee scheme is pretty big news. It opens up the first-time buyer market a little more. I think the infrastructure pledge to get sites off the ground is also pretty good news, said Numis analyst Chris Millington.
Osborne said the 400 million pound fund would help construction firms that cannot get bank finance by enabling projects which already have planning permission but which failed to get off the ground.
Persimmon said the news would help both the industry and homebuyers alike.
This initiative will enable mortgage lenders to offer 95 percent loans on new build homes, dramatically reducing the deposits people have to save, it said in a statement.
The Home Builders Federation, which represents the industry, said the initiatives were very positive measures.
House prices edged up in November, beating expectations despite a weak economy, but activity remains subdued and prices are likely to dip in the next 12 months, mortgage lender Nationwide said Tuesday.
Osborne also confirmed plans to tap pension funds to provide the bulk of up to 30 billion pounds of investment in 500 new national infrastructure projects.
(Editing by David Cowell)