Darling plan sends builders soaring

Taylor Wimpey and Persimmon shares jumped more than 9%, while Barratt Developments was up nearly 7%, Bellway more than 6%, Redrow around 5% and Bovis Homes 4%.

It was a much-needed rally after 18 months of pain and came after Chancellor Alistair Darling announced a stamp duty holiday and a raft of other measures to boost the housing market.

Equipment hire firm Ashtead was also on the up after it reported strong first-quarter profits growth of 26% to £35.9 million, despite the weakening construction sector.

But City analysts poured scorn on the Chancellor's plans for the housing market and said the building industry remained in the grip of its worst crisis for decades.

Kevin Cammack of Kaupthing Singer & Friedlander said: "It is not entirely surprising we have seen this sort of share price move but my view is that it will be short-lived.

"At the fringes it makes a difference but the reality of life is that specific measures like this do not turn cycles. The cycle turns on broad economic fundamentals and they have not really changed," Cammack added. Alastair Stewart of Dresdner Kleinwort said the stamp duty holiday was so small it "will make no difference whatsoever to the market".

He added that the "limited but complex" proposals to help first-time buyers on to the housing ladder could, in fact, delay their moves further. And he warned that shared equity schemes "are likely to end up as shared negative equity" schemes as prices fall.

"The elements appear so complex and so open to interpretation by local authorities and housing organisations that it is likely to slow up moves by the few would-be first-time buyers that have not been scared out of buying by the Chancellor's reported comments that the UK faces its worst recession in 60 years," said Stewart.

The stamp duty holiday on homes worth up to £175,000 was seen as a boost only to housebuilders at the cheaper end of the market, such as Bellway, which has an average selling price of £169,000.

Persimmon's average selling price is presently £181,485 while at Bovis it is £196,700, at Taylor Wimpey £202,000 and at Barratt £205,700. But the latter two companies also sell social housing for around £100,000.