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Taylor Wimpey & Persimmon: Stamp duty holiday extension boosts housebuilders

UK housing stocks push higher as Rishi Sunak brings a longer-than-expected extension to the stamp duty holiday.

Rishi supports housing market until September

Rishi Sunak has gone above and beyond market expectation by extending the recent stamp duty holiday by a further six months. Three of those months will see the threshold reduced from £500,000 to £250,000, returning to £125,000 in October. Understandably this has provided a welcome boost for the housing market, with prices and activity likely to pick up once again.

Positive news also comes in the form of the new mortgage guarantee scheme which allows first time buyers to purchase a property with just 5% deposit. All of this serves to further prop up the housing sector, taking us further away from that Brexit deadline which was previously expected to initially dampen sentiment around UK housing. This should help alleviate some of the fears many had of a collapse in demand and prices when the stamp duty holiday and Brexit come to a head at the same time.

Importantly, this staggered approach to eradicating the stamp duty holiday does seem to ease concerns which could drive housebuilders higher from here. I wrote last week about how a three-month extension may only provide a brief boost, yet this notion of skepticism does ease with the fact that we will see over six months left of incentives to engage as a buyer.

Taylor Wimpey approaching crucial resistance level

Taylor Wimpey has pushed into the £1.76 resistance level today, with the stock pushing towards a potential eleven-month high. Whether or not we see a break and close daily candle above that level will be key here, with the stock looking to finally exit this three-month consolidation phase. The question that this level will answer is whether or not markets see today’s announcement as being notable enough to exit this phase of uncertainty.

Persimmon

Persimmon shares are similarly approaching a crucial resistance level, with the February peak of £28.70 representing the high of the day today. Notably, we can see that price action have struggled to break through the pre-crisis level of £29.24. Thus, with the cluster of resistance levels up ahead between £28.70 and £29.65, the ability or inability to break through this zone will be key in determining whether Rishi Sunak has managed to improve sentiment enough to drive the next leg higher for this stock.

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