Chancellor George Osborne said the government would pay a bonus of 50 pounds ($73) on every 200 pounds saved in its "Help to Buy Individual Savings Account", with a maximum bonus of 3,000 pounds available.

"We do it to tackle two of the biggest challenges facing first time buyers – the low interest rates when you build up your savings, and the high deposits required by the banks," Osborne said in his final budget before a national election on May 7.

The move, which will cost about 2.2 billion pounds in the period to 2019-2020 according to government figures, boosted the share prices of house builders.

Taylor Wimpey (>> Taylor Wimpey plc) and Redrow (>> Redrow plc) were both trading up 2.3 percent at 1441 GMT, while Barratt Developments (>> Barratt Developments Plc) and Bovis Homes Group (>> Bovis Homes Group plc) rose 1.3 percent and 1.4 percent respectively.

(Reporting by Paul Sandle; Editing by Mark Heinrich)