Unease growing for housebuilders as price rises ease

There is mounting evidence the bounce-back in house prices seen last year has run out of steam, while concerns are also increasing over the implications for builders of a new political regime.

Nationwide Building Society's latest figures fuelled speculation that the recovery in property prices had stalled as it showed the average cost of a home edged up by just 0.1 per cent during June. The annual rate at which house prices are rising also fell for the second month in a row, dropping to 8.7 per cent.

Housebuilding giant Taylor Wimpey gave a cautious outlook in its recent update.

While it said the market had been stable since April, it is braced for fall-out from the Government's hefty spending cuts, on areas such as housing initiatives and social housing grants.

A shortage of land with planning consent and the threat of changes to planning policy could also heap further pressure on the market, it added.

Taylor's first-half sales figures failed to inspire the market, coming broadly in line with a year earlier, while completions were slightly down year-on-year.

York-based Persimmon reported a 20 per cent increase in total sales when it last updated in April and Bovis saw an 11 per cent rise in the year to April 30.

But conditions have since changed, under the stewardship of chief executive Mike Farley, and investors will be eyeing comments closely from Charles Church owner Persimmon when it updates tomorrow, while Bovis follows on Friday.

Retailer Marks & Spencer also takes centre stage this week, when it posts its latest trading figures on Wednesday as new chief executive Marc Bolland gets his feet under the table.

In May the firm cheered a return to modest profit growth with earnings of 632.5m in a final swansong for outgoing chief Sir Stuart Rose.

This week's update is likely to be too early for detailed indications of where former Wm Morrison chief executive Mr Bolland plans to take the business, although for now at least M&S will settle for sales growth recovering from the worst ravages of recession.

The firm enjoyed a particularly strong final quarter after a far-better-than-expected 5.1 per cent rise in same store sales, although the figures were boosted by the inclusion of the first day of its post Christmas sales.