Prime Minister Andy Burnham has announced the 'Your First Home' scheme, an equity loan initiative designed to assist first-time buyers onto the property ladder. The scheme, which requires a 2.5% deposit and offers a 20% government support, applies to new builds from participating housebuilders.
Following the announcement, UK housebuilder stocks saw a significant uplift on 28 September. Persimmon shares increased by around 16%, while Barratt Redrow shares rose by approximately 13%. The FTSE 350 Household Goods & Home Construction Total Return Index also saw a gain of about 11% today, having fallen 13% in the 12 months prior to the announcement.
Jack Fletcher-Price, an equity analyst at Morningstar, stated that the scheme "could be the catalyst the UK homebuilding sector has been waiting for," suggesting that lowering the deposit barrier should lead to stronger demand. Analysts at Peel Hunt forecast a 10% uplift in sales volumes by 2028 and a 200 basis point increase in gross margins, potentially leading to a 70% increase in earnings per share for the sector.
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, noted that the previous Help to Buy scheme supported over 387,000 new-build purchases, predominantly by first-time buyers. However, Chiekrie cautioned that the full details of the 'Your First Home' scheme will be unveiled at the Autumn Budget on 28 October, which may lead some buyers to delay purchases until then.