Brown cuts stamp duty at start of fightback

House prices in Britain are sliding after a decade in which they trebled as the credit crunch, which started with a slump in the U.S. housing market, has forced banks to make it much harder for people to get mortgages.

Two-third of households own their homes in Britain, making prices a key plank for consumer confidence. The 10 percent fall in prices over the year and collapse in transactions is now hitting the economy hard as housing-related businesses suffer.

Construction activity shrank for the sixth month running in August, according to an economic report published on Tuesday.

Some analysts cautioned that a previous stamp duty holiday introduced by the Conservatives in the early 1990s housing crash had little discernible impact on new home loans.

"I don't think this changes much at all. People would be better waiting for house prices to fall," said Ed Stansfield, property economist at Capital Economics.

They also cautioned that the measures would do little to help middle-income Britons living in London where the average house price stands at 291,000 pounds, though that is inflated by large numbers of million-pound plus properties.

Still, shares in housebuilders such as Taylor Wimpey and in home improvement group Kingfisher jumped 9 percent and 5 percent respectively on the package, which included a plan to offer five-year interest-free loans to some first-time buyers moving into newly-built properties.

"The market's thinking that if they can turn work-in-progress into cash more quickly, it will help them keep within their banking covenants," Kaupthing Singer & Friedlander analyst Kevin Cammack said.

The government said its measures were targeted at the most vulnerable sections of society but the Conservatives said Brown's housing package would not help the vast majority of families facing a rising cost of living.

"I suspect what we will see in the coming weeks is a desperate and short-term survival plan for the prime minister rather than the long-term economic plan the country needs," the party's economic spokesman George Osborne said in a statement.