Housebuilders' valuations have surged by £2bn after Andy Burnham unveiled a new home loan scheme for first-time buyers.
Shares in Britain's biggest listed builders soared on Monday morning on hopes that the new scheme, called Your First Home , would ignite a wave of demand and drive up woeful building rates.
Barratt Redrow, Bellway Homes, MJ Gleeson and Persimmon Homes were all up by between 12pc and 18pc as of 12pm, while Bloomberg's FTSE 350 subindex for the sector surged by as much as 16pc – a record rise.
The collective value of the UK's eight largest builders rose by £2bn, according to analysis by RBC Capital Markets.
The Your First Home scheme, set to be introduced in next month's Budget, will allow first-time buyers to purchase new-build properties with a 2.5pc deposit and a 20pc government-backed equity loan scheme with an initial interest-free period.
Buyers will only be able to access the scheme if their income is below a certain threshold and the property they are buying is below a local price cap.
Analysts said the scheme could bring tens of thousands of additional new-build homes each year.
The scheme is a revised version of the Help to Buy equity loan scheme that was introduced by George Osborne, the Conservative chancellor, in 2013 and ran for a decade.
However, Mr Burnham's iteration allows first-time buyers to purchase with a smaller 2.5pc deposit, rather than 5pc under Help to Buy, and will include an as-yet-unspecified contribution from developers.
The scheme will be a lifeline for housebuilders grappling with a toxic cocktail of materials cost inflation, new regulations and low buyer demand that has been heavily constrained by high mortgage rates.
Analysts have previously warned that Labour is on track to miss its central manifesto promise to build 1.5 million homes over this parliament by more than half after planning consents slumped to their lowest in more than 20 years last year.
Barratt Redrow, Britain's biggest housebuilder, was down by around a fifth this year until Monday.
Anthony Codling, an RBC analyst, said: "Your First Home has the potential to be a huge stimulus for housing supply. If it follows the footsteps of Help to Buy, it could potentially be responsible for around half of the new homes built."
The introduction of the previous Help to Buy scheme in 2013 triggered a 31pc increase in housing starts in its first year.
Marcus Dixon, the head of residential research at JLL consultants, said: "If we see a 31pc increase to annual starts in England, it could mean an additional 40,000, which would get us to 170,000."
Mr Codling said housebuilders such as Crest Nicholson with greater exposure to the south of England, where buyer demand is most constrained by affordability, will see the biggest boost from the scheme.
Those such as Berkeley Homes which focus on higher-priced homes that are likely to exceed the caps will see the least difference, he said.
Building materials suppliers also soared, with concrete manufacturer Forterra jumping by 15pc and brick maker Ibstock up 21pc.
However, Aynsley Lammin, an analyst at Investec, warned it was vital that the scheme be implemented in time for the 2027 spring selling season, otherwise it could bring a further fall in transactions.
He said: "There is a question about when and how quickly the scheme will be implemented and there is a risk that a significant delay could cause nearer-term first-time buyer purchases to be deferred."
