Despite what looks on the face of it to be a reasonable housing survey from the Royal Institution of Chartered Surveyors, building shares are under pressure as analysts look on the gloomy side.
Rics said prices continued to rise and demand was outstripping supply. But analyst Alastair Stewart at Investec pointed to a slowdown in some key indicators:
Housebuilders' shares could continue to suffer in the short-term following the release this morning of arguably the most share price-sensitive of data points, the Rics survey of estate agents. The November survey indicates sales rates have flattened, the rate of improvement in buyer enquiries is slowing down and – most importantly for us –instructions to sell are up for the sixth month running, suggesting supply and demand are starting to balance out.
The survey also showed that price rise expectations among estate agents came off the boil 'a tad'. This fits into our view that the "recovery" in the market was being driven by supply being held back, rather than rampant demand. The seller instructions balance had been consistently in negative territory for over two years.
We believe this is price sensitive for the housebuilders, despite the survey being driven by the secondhand market. Good/bad Rics surveys have for many months appeared to have boosted/hit housebuilders' shares more on the day of release more than any other survey.
And investors do seem to have taken the negative view. Barratt Developments is down 4.5p at 105.6p, Taylor Wimpey has fallen 1.01p to 32.99p while Persimmon is off 12p at 414p and Bellway is 7p lower at 724p.
