Avoid the scrum: touch down in safer markets.
Housing revival may hit the buffers
Published: 24 November, 2009
LONDON: Stockbrokers KBC Peel Hunt said investors are better off putting their money into builders' merchants than housebuilders.
Robin Hardy at the stockbroking and advisory firm said last week's homebuilders' reporting season had advised that there were "clouds are on the horizon" that will hurt the profit margins and market ratings of these companies.
Those results revealed that housebuilders fear rising commodity prices will lift the cost of materials and make it difficult to pass this on in the price of a completed home.
Mr Hardy stated that investors' money may be better off in the home improvement market, with companies such as Travis Perkins, Topps Tiles and B&Q.
"We normally set little store by property website Rightmove's comments, but when a deeply interested party reports a negative trend and promises three months of the same, we take notice," he said.
"The Council of Mortgage Lenders is also hawkish, saying that we can expect only a modest improvement in the housing and mortgage markets next year.
"It is also notable that the Housing Bill, set to treble the social housing budget from fiscal 2010, was not mentioned in the Queen's Speech," he added.