MARKET REPORT: Housebuilders boom as demand props up prices

Housebuilders were on the front foot after two leading developers said booming demand continues to push up prices and offset higher costs.

On a day of relative calm on the stock market, mid-cap builder Bellway rose 3.3 per cent, or 73p, to 2282p as it reported ‘strong sales demand’ over the four months to June 5, with an average of 253 reservations per week, up from 239 a week a year earlier.

Fellow FTSE 250-listed Crest Nicholson gained 11.2 per cent, or 28.6p, to 283.6p after its revenues rose 12.3 per cent to £364.3million in the six months to April.

Going up: On a day of relative calm on the stock market, mid-cap builder Bellway rose 3.9% as it reported ‘strong sales demand’ over the four months to June 5

But the Surrey-based housebuilder reported a loss before tax of £52.5million for the six months to April following an exceptional charge of £105million.

Crest Nicholson was among the firms that signed up to the Government’s building safety repairs pledge to protect leaseholders from paying for the cost to remove dangerous cladding.

The industry is also grappling with the impact of higher interest rates on buyers, though property prices continue to rise, with the latest figures from Halifax showing the value of a typical home hit a record £289,099 in May, up 10.5 per cent on a year earlier.

Housebuilding shares have tumbled by nearly a quarter on average in the past year, according to analysts at Peel Hunt.

The sector is attracting the interest of private equity firms, with Countryside Partnerships (up 1.3 per cent, or 3.6p, at 283.8p) putting itself up for sale this week. Peel Hunt said Crest Nicholson is also vulnerable to a takeover because its shares remain cheap.

Fellow mid-cap builder Redrow rose 2.6 per cent, or 13p, to 520.5p and Vistry was up 2.8 per cent, or 24.5p, to 896.5p.

And among the blue-chips, Taylor Wimpey was up 2.1 per cent, or 2.55p, at 124.7p, Persimmon gained 1.5 per cent, or 32p, to 2150p, Berkeley climbed 1.4 per cent, or 55p, to 4025p and Barratt rose 2.4 per cent, or 11.5p, to 487.2p.

Meanwhile, property website On The Market slid 1.7 per cent, or 1.5p, to 85p after its profits fell to £0.1million from £2.7million last year.

Stock Watch – Paragon

One of the UK’s largest mortgage and loan providers has upgraded its guidance for the year on the back of record profits.

Paragon said profits soared 27.3 per cent to £105.5million last year.

The surge was driven by strong growth in lending, which rose 32.2 per cent to £1.49billion.

As a result, Paragon has hiked its share buyback programme to £75million from £50million and now expects its commercial and mortgage lending advances to increase. 

Shares rose 6.8 per cent, or 32p, to 502p.

Across the Atlantic, Wall Street was left reeling after the S&P on Monday entered a so-called ‘bear market’ – meaning it has lost 20 per cent of its value since its recent peak.

It was down 0.5 per cent at one stage yesterday as the Dow Jones Industrial Average dropped 0.7 per cent and the tech-focused Nasdaq found itself down 0.03 per cent during the day.

In London, the FTSE 100 index was down 0.3 per cent, or 18.35 points, at 7187.46 after five days of losses and the FTSE 250 dropped 0.6 per cent, or 115.18 points, to 19045.03.

Banking stocks were on the march in the top tier amid an expected interest rates hike on Thursday. Standard Chartered climbed 3.5 per cent, or 20.2p, to 599.6p, HSBC Holdings ticked up 3.5 per cent, or 17.5p, to 520.4p, Lloyds Banking Group rose 1.3 per cent, or 0.55p, to 43.37p and NatWest added 1.1 per cent, or 2.4p, to 221.4p.

Oil prices continued to rise, topping $125 a barrel at one point, sending shares in BP up 2 per cent, or 8.65p, to 434.95p and Shell up 0.9 per cent, or 20.5p, to 2308p.

Shares in building equipment rental firm Ashtead slid 4 per cent, or 153p, to 3651p despite a 19 per cent rise in annual revenues to £6.6billion and a 35 per cent jump in profits to £1.4billion.

The cost of living crisis continued to rattle the economy as retail stocks took a hit.

With regular pay falling, blue-chip firm Ocado fell 10.8 per cent, or 95.4p, to 784.6p, B&Q-owner Kingfisher slipped 4.4 per cent, or 10.8p, to 234.8p, 

Next sank 2.4 per cent, or 148p, to 5938p and JD Sports dropped 2.8,per cent, or 3.2p, to 111.75p. 

This also affected mid-cap retailers, with online greetings card firm Moonpig down 2.6 per cent, or 6p, to 221.6p and homeware group Dunelm off 2.1 per cent, or 16.5p, to 776.5p.

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