The blue chip FTSE 100 <.FTSE> index ended up 0.9 percent at 7,438.84 points, slightly outperforming a broadly positive European market, helped by a fall in sterling.
Housebuilders Persimmon (>> Persimmon), Barratt Developments (>> Barratt Developments) and Taylor Wimpey (>> Taylor Wimpey) were among the biggest gainers, jumping 2 percent to 4.2 percent after UK Prime Minister Theresa May pledged 10 billion pounds ($13.4 billion) of extra funding to help people buy new homes.
Persimmon also hit a record high.
"That's a clear positive, and I think (the extension) should actually benefit, more so, the more diversified builders," Ken Odeluga, market analyst at City Index, said.
"To the extent that we could get something which resembles anything like a soft Brexit, this would forestall much of the feared impact on the sector," Odeluga added.
Housing-related stocks were hit particularly hard by uncertainty following the Brexit vote in 2016, as the sector is closely linked to the state of the UK economy. Many of those stocks have since recouped those losses.
Elsewhere budget airline easyJet (>> EasyJet) jumped 5.2 percent after peer Monarch Airlines <MONA.UL> went bust.
This spurred a rally across European carriers on the prospect of scooping up bookings from customers switching airlines. Shares in British Airways operator IAG (>> International Consolidated Airlines Group) also rose 2.4 percent.
"(Monarch's failure) means fewer seats to fill sector-wide ... This should mean Ryanair and EasyJet can comfortably improve load factors, even if the reputation of the former has suffered of late," Neil Wilson, senior market analyst at ETX Capital, said in a note.
"This should be positive for margins despite pricing pressures."
A rise among mining stocks also helped the index, with shares in Rio Tinto (>> Rio Tinto), Glencore (>> Glencore) and Anglo American (>> Anglo American) all rising more than 1 percent thanks to a buoyant copper price. [MET/L]
However, outside of the blue chips, shares in NEX Group (>> NEX Group PLC) dropped 5.6 percent after the financial broker flagged increased spending at its post-trade and information services operations, which would dent that division's profitability.
(Reporting by Kit Rees; additional reporting by Danilo Masoni; Editing by Keith Weir and Andrew Heavens)
By Kit Rees