Questor: housebuilders looking strong as update season begins

The fear of what George Osborne would announce in the Budget to curb rising house prices, mixed with speculation of an interest rate rise sooner rather than later, hit the housebuilders hard.

Only Persimmon, up 8.5pc in the year, and Barratt Developments, up 4pc, held on to their gains.

But all the housebuilders were boosted last week after Mark Carney, Governor of the Bank of England, announced a cap on home loans and tougher checks, but said the central bank did not aim to curb house prices directly.

The housebuilders are also about to enter into their period of updating the market and first up is Persimmon this week. Expectations are that the momentum of the last few years will have carried in to the second quarter. Investors will be focusing on forward sales and average selling prices, as well as any comments on the impact of an interest rate rise.

The following week Barratt, Taylor Wimpey and Bovis will all be updating the market with the second quarter expected to be positive for them as well.

For an investor in a housebuilder it has been a choppy year so far. There is still much uncertainty over interest rate rises but the sector is ahead of the wider FTSE 100 which is down 0.1pc for the year. The issue of limited supply also remains, supporting prices.

For those investing for the long-term, Questor maintains its hold stance on the sector.

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