Housebuilders rebound as government shows support

By Marc Roca

LONDON (Reuters) - Shares in most housebuilders rose on Thursday following a government announcement that it will introduce a package of measures to help stabilise the housing market this month.

Housebuilders, which have seen their market value plummet by over three quarters in less than a year due to the credit crunch, are keen to see the government step up its game as the deepening housing market downturn threatens their future.

"My objective is to put together a package of the best possible proposals, working with industry and others to minimise the problems we currently face and create the conditions for a rapid recovery," Housing Minister Caroline Flint said on Wednesday, as shares in housebuilders plummeted after industry leader Taylor Wimpey (TW.L: Quote, Profile, Research) put off a fundraising plan announced just two days earlier.

Flint unveiled initial measures to increase confidence in the industry such as larger upfront payments to developers and the creation of a national clearing house to buy unsold stock from builders.

She also increased funds for the Housing Corporation, the government's affordable homes agency, by 270 million pounds to buy 5,300 homes over three years.

These measures add to the 200 million pounds committed in early May to purchase unsold stock from housebuilders for social housing, which will be accelerated by the new clearing house.

"If the government really wants to intervene, buying back more stock for social housing that generates cash earlier on the cycle for housebuilders would take an enormous pressure from the market in two ways," Panmure Gordon analyst Mark Hughes told Reuters.

"Cash would keep bankers happy, diminishing the need for fundraisings, and there would be less stock in the market, which would be positive."