Theresa May’s bid to woo young first-time buyers by committing an extra £10bn into the Government’s Help to Buy scheme persuaded investors yesterday that the housebuilding sector is built on strong foundations.

The Government is attempting to help another 135,000 people get a foot on the slippery UK property ladder through the extension and Help to Buy now underpins a sizeable chunk of new build sales with 44pc of Barratt Developments and 57pc of Persimmon’s private sales using the scheme, according to Liberum analyst Charlie Campbell.

Concerns have been building in the last few months that the Help to Buy scheme and low interest rate environment underpinning the sector’s recent outperformance was about to be pulled out from underneath UK housebuilders with some investors interpreting high profile directors selling down stakes at Redrow and Berkeley Group in September as the sector’s top brass calling the top of the market.

The scheme “provides the new build sector with a significant competitive advantage and any extension or increase in Help to Buy funding strengthens that advantage,” according to Jefferies analyst Anthony Codling.

The Help to Buy scheme has created a “two speed housing market” with the UK’s biggest new-build developers “travelling faster than the existing homes market”, he said.

Builders across the sector buoyant from the announcement rallied to the top of the UK’s two benchmark indices. FTSE 100 housebuilders Barratt Developments and Persimmon climbed 26p to 640.5p and 108p to £26.90, respectively, a 4.2pc rise apiece. While on the mid-cap index, peers Bovis Homes and Crest Nicholson jumped 39p to £11.33 and 20.5p to 573.5p, respectively.

Elsewhere, airlines across Europe were flying high on hopes that they can snap up market share following the collapse of Monarch.

Low-cost rivals easyJet and Ryanair jumped 63p to £12.80 and €0.63 to €16.90, respectively, as Monarch became the third casualty in the European aviation sector this year.

FTSE 250 sandwich maker Greencore plunged 14.2p to 182p, a 7.2pc dive, after the US Food and Drug Administration said that the company’s US business had voluntarily recalled some of its products. Numis analyst Damian McNeela told clients that the market’s reaction reflected concerns over the company’s ability to win new business to fill its legacy sites and that the precautionary measure will not hamper the development of the US business.

The impact of the chaos in Catalonia on the markets was largely contained to the euro and stocks in Madrid with Spain’s blue-chip index, the IBEX 35, shedding 1.2pc. Meanwhile in London, a poor day of trading for the pound and miners being lifted by stronger-than-expected Chinese manufacturing data allaying concerns of a slowdown in the Asian powerhouse helped the FTSE 100 advance 66.08 points to 7438.84, its highest level in just under two months.