Housebuilders are in demand after a positive trading update from Bellway.
The company said profits for the six months to the end of January were expected to rise by up to 20%, with a similar number of completions to the same period last year, albeit at a slightly higher selling price. It said the housing market did not get its normal autumn uplift, due to the uncertainty surrounding the coalition's comprehensive spending review. But it added:
Since the CSR, home reservations taken are ahead of the board's expectations, although still slightly down compared with the same period last year. The decline in consumer confidence appears to have levelled out and encouragingly, people are still committing to purchase even at this time of year.
Taylor Wimpey
Persimmon
Barratt Developments
The update has lifted Bellway's shares by 35.5p to 593.5p, and other builders are also benefiting. is up 1,77p to 29p, has put on 24.6p to 407.3p and is 5.1p better at 83.9p. Jon Bell at Shore Capital said:
This update from Bellway mirrors those of other house builders in the recent past. Trading on a significant discount to net asset value and having net cash on its balance sheet, the company offers attractive value to investors in our view. Buy.
Simon Brown at Matrix was also positive:
Bellway is our pick of the mid-sized housebuilders because of its land-bank strength and depth, its net cash position (£59m) and senior management's impressive track record. With a bias to lower-priced homes and a strong presence in the more robust London and southern England markets, the progress the group has achieved in the year just ended has established a base from which further progress can be achieved in the year to July 2011, in our view. The group has the resources in management and balance-sheet terms to respond well to the future fluctuations in the market, and remains a core pick in the sector.
