House builder shares fell by up to 8.5% yesterday after an analyst’s note from Dresdner Kleinwort predicted bad news from the four companies that will issue statements this week. Financial Times, The Times, Daily Telegraph
Persimmon, Redrow, Bovis and Bellway are all scheduled to update the market against a grim backdrop for the sector after a year-on-year fall in mortgage approvals and the worst reservations and price data since the 1990s.
Alastair Stewart, housebuilder analyst at Dresdner, said bad news from Persimmon, which will report full year results on Wednesday, could provide the biggest shock because it was the most highly regarded stock among the house builders. He advised investors to 'abandon the sector ahead of this week’s flurry of bad headlines'.
'We believe now that there will be not only falls in volumes across the sector but it will be a more abrupt slowdown than even we had anticipated,' he said.
'We now expect price falls in the wider new build sector, not just the blighted new apartments market, where we see the mounting possibility of a headlong crash.'
He said stocks were already trading below the value of their net assets and land write downs had now become a possibility.