PREVIEW:UK housebuilders seen muted on outlook
LONDON, July 6 (Reuters) - British housebuilders will report stabilising sales and prices this week, but trading updates will be marked by a cautious tone and muted comment on the outlook as a dearth of mortgage lending continues to crimp momentum.
Positive data and trading updates kickstarted confidence in the sector in the first half, with shares in UK housebuilders .FTASX3720 rallying 10 percent, bouyed by home buyers trickling back to the market.
"We will hear a continuing trend of stabilisation on volumes but at a very low level, and a short-term stabilisation of prices," Mark Hughes, co-head of research at Panmure Gordon told Reuters.
"But any growth you are seeing, it's coming from an incredibly low level," he added.
Current commentary is likely to be positive said Andrew Gardner at MF Global, "although the housebuilders will probably sound quite frustrated with regards the outlook".
Robin Hardy, analyst at KBC Peel Hunt agreed that housebuilders "won't want to look forward" when they update the market as the rest of the year could pose more of a challenge to the builders. Banks continue to curb lending, and the onset of quieter summer trading as well as rapidly depleting stocks may hit volumes and prices further.
"In September, we may see things slip back again on a transactional side," said Hughes. "I do not buy that this is the bottom of the market on price, but I don't think we'll see a further major drop in volume," he added.
"H2 numbers could be very low indeed." said Hardy. "People will drift away from new build because they won't have the same level of stock," he added.
Furthermore, Persimmon (PSN.L), Barratt Developments (BDEV.L), Redrow (RDW.L) and Bovis Homes (BVS.L) will reveal little in the way of new indicators as to how long the downturn will last, say analysts, or when the market will reach the bottom of the slump.
"We suspect the... trading updates from five housebuilders will reveal little by way of additional market insight for the simple reason that the industry is entering its normal 'quieter' period," said analysts at Bank of America/Merrill Lynch.
However, the builders will unveil that pent-up demand has started to prop-up declining house prices, underpinned by data from Halifax and other mortgage lenders. House prices rose 2.6 percent, according to the Halifax house price survey. [ID:nL4210746]
Analysts remain more bearish, however, anticipating house prices will fall 35 percent on average from peak to trough, after 10 years of growth. Prices have fallen 20 to 22 percent so far, said Gardner.
Meanwhile a Reuters poll showed average house prices are seen falling 8 percent this year, but are likely to remain flat in 2010. [ID:nLAG003534]
Prices are highly volatile in markets with thin trading, say analysts, with prices expected to continue their downward trend.
