According to HM Revenue & Customs, seasonally adjusted basis UK housing transactions, with a value of £40 000 and over, were 74 000 in August - 19% higher than August 2008 and well clear of last November's low of 53 000.
Taking the quarterly run-rate as a better gauge of underlying trends, transactions in the June to August quarter were up 7% on the same quarter in 2008. This is the first time in two years that the quarterly run-rate is up year-on-year.
Housing transaction activity is an important lead indicator for the RMI market and, by extension, for the builders' merchants, O'Donoghue said. "Intuitively, there is probably a lag of a few months before the builders' merchanting sector is impacted by what is happening in housing transactions. Hence while the sector may still be reeling from a 25% drop in H1 2009 transactions compared with the first half of 2008, the improving trends point to significantly more benign operating conditions in 2010."
"Travis Perkins, with 100% of its business in the UK, is the purest play on the UK housing recovery theme. This is why it is our top pick in the European lightside building materials sector. But Grafton, SIG, Wolseley and Saint-Gobain (in that order) will also benefit."