An improving outlook for the UK housing market gave stocks in the home construction sector a bit of a boost on Monday, one of the few categories immune to the wider market sell-off.
Stocks were lifted by the weekend's news that the second phase of the government's housing stimulus scheme, 'Help to Buy', is being launched next week, three months earlier than planned. This next phase will allow lenders to provide up to 95% mortgages for any homes worth up to £600,000.
Speaking to the BBC on Sunday, David Cameron said: "As Prime Minister, I'm not going to stand back while people's aspirations to get on the housing ladder, to own their own flat, to own their own home, are being trashed."
Housing-market data meanwhile continues to improve with the Bank of England revealing on Monday that UK mortgage approvals rose to the highest level in more than five years in August.
Approvals for house purchases came to 62,226 in August, up from 60,914 in July, beating the consensus forecast for 61,500 approvals.
Meanwhile, house prices in England and Wales rose by 0.5% month-on-month in September, according to a survey from property analysis firm Hometrack, the biggest gain in more than six years, since May 2007. They are now up by 2.4% since the same month of one year ago.
However, Richard Donnell, Director of Research at Hometrack, said: "Prices are rising off a low base and talk of a housing bubble in relation to the national market is overdone."
Bellway, Taylor Wimpey, Redrow and Berkeley Group were among the best performers in afternoon trade in London.
Sector peers Persimmon and Barratt Developments, meanwhile, were bolstered by comments from JPMorgan Cazenove, which upgraded its ratings for both stocks to 'overweight'.
The bank said that the sector has underperformed the market by around 11% in the third quarter due to worries over the scale of upside and longer-term sustainability of earnings on the back of concerns over eventual interest-rate increases, cost inflation and speculation that Help to Buy could be withdrawn. However, JPMorgan Cazenove said that these concerns are "misplaced".
"Despite taking what we view as a conservative stance on house price inflation, volume growth and cost inflation, our earnings per share estimates for 2014 and 2015 are around 25% ahead of Bloomberg consensus. We view the recent sell-off as a buying opportunity."
Top performing sectors so far today
Household Goods & Home Construction 10,124.09 +0.53%
Electricity 9,526.04 +0.38%
Real Estate Investment & Services 2,524.07 +0.09%
Bottom performing sectors so far today
Automobiles & Parts 7,996.19 -2.87%
Mining 16,389.45 -2.11%
Aerospace and Defence 5,119.25 -1.82%
Industrial Engineering 10,231.71 -1.48%
Life Insurance 6,169.72 -1.48%