Shares in Barratt Developments PLC (LSE:BDEV), Bellway PLC (LSE:BWY), Redrow and other housebuilders fell on Wednesday as analysts examined government plans floated in the media to introduce a replacement for the Help to Buy scheme as one potential measure to support the housing market.
Considerations include extending HTB to all properties, ie not only new-build, with other options including a mortgage guarantee scheme.
"Help to Buy is dead, long live Help to Buy," said Jon Bell at Deutsche Bank.
"The devil would be in the detail," said Marcus Cole at UBS.
Reports at the weekend suggested Downing Street could re-introduce the scheme as first-time buyers are finding higher loan-to-value (LTV) mortgages expensive and in short supply.
The Help to Buy equity loan scheme was introduced in England in 2013 and remained in place until late last year, enabling those with small deposits to access mortgages by providing a 20% equity loan or 40% for those in London interest free for five years.
From early 2021, it was confined to first time buyers and subject to regional price caps.
"It appears discussions are still at an early stage and could be announced with the Autumn statement or next Spring Budget (i.e. 2024)," said Cole.
It was noted that the Conservatives appeared to be responding to Labour's announcements of reinstating the 300,000 annual housing target that was abandoned by the Conservatives and introducing a broader mortgage guarantee scheme.
As well as coming in the same week as local elections, the leaked media report comes ahead of a general election that is widely expected to be held next year and has a final deadline of January 2025.
"Without more details, it is hard to gauge the impact of a potential return of HTB," said the UBS analyst.
"Much would depend on the terms (e.g. % of equity loan, price caps, interest rate, eligibility) and to what extent new build would be put at an advantage. We also note that other parts of the policy mix look less favourable, most notably planning which would likely constrain land supply. Assuming similar terms to the version that was restricted to first time buyers, we would think reservations rates could be roughly 20% higher."
He said there could also be inflationary impacts that could support profit margins.
Barratt shares fell 1.1%, Redrow 1.4%, Bellway 0.9%, Persimmon 0.6% and Berkeley 0.5%, though over the past two days, they are mostly higher.