Now the housebuilders are fighting back. Four leading firms have recently made strikingly similar announcements in an attempt to reassure the City that the bottom is not about to fall out of their market. Berkeley kicked off the campaign three weeks ago and was quickly followed by Crest Nicholson, Persimmon and Wimpey. The message is clear: yes, prices are rising too high; and no, the trend cannot continue – but the "correction" – as they quaintly describe any slowdown – will be minor and welcomed. This is because undersupply of new houses and low-interest rates will keep demand strong.
The company statements coincided on a number of key points, which hinted at a concerted campaign. One City analyst says it is obvious that the firms have decided to present a united front. "Of course they want to say the same thing and that is natural and makes sense. It is in all their interests. They must have had a chat about what they wanted to say."
We might experience an easing or correction in the market which we would welcome, but we do not expect a major downturn
Berkeley, 26 June
Martin Donohue, chief executive of Westbury, denies that the statements are proof of an organised campaign, but agrees that getting the message across to the City is vital. "Investors have to be convinced that profits are going to be maintained because most analysts still believe the sector is very cyclical," he says. "I'm not saying it isn't cyclical, but it is no longer so variable."
It is too early to say if the tactic is working. Shares in most housing stocks have fallen from their peaks of April and May, and analysts predict a further decline, but the development does point to a growing awareness among firms that handling the media and the City well can help share prices.
Sales volumes have decreased in line with our expectations as we move into the summer months. We welcome this return to a more sustainable rate of sale and price growth
Persimmon, 27 June
Traditionally, construction has never been as good as other sectors at selling itself to the City's financiers or the nation's media. "A couple of years ago, dotcom entrepreneurs wearing jeans and trainers managed to get millions for companies based on nothing more than a flimsy idea with no turnover or profits," says construction analyst Leslie Kent. "Construction executives, on the other hand, often struggle to raise any semblance of interest in their companies despite growth and steady track records. It's down partly to how they sell themselves."
For years, firms did not try to change the attitude, naively relying on their accounts to speak for themselves. That naivete is fast disappearing. Berkeley chief executive Tony Pidgley says his approach is simple: keep delivering profit and growth. But he also understands the importance of confidence-building in the City. Pidgley is one of the most adept at getting the City's attention and keeping it. He manages this through a mixture of consistent financial performance and canny contact-building in the Square Mile. The result is that he is always listened to.
While it is unlikely that current levels of house-price inflation will be sustained, we expect any correction to take the form of a slowdown in the rate of house price inflation
Crest Nicholson, 27 June
"I don't like the phrase 'united front', but we are getting together and presenting a consistent message," Pidgley says. He brought his group back into the House Builders Federation last year after several years' absence because he wanted to "help move the sector forward with one voice". Although the HBF does not lobby the City directly, its lobbying indirectly influences investors. Earlier this year, the HBF had a PR triumph after the Joseph Rowntree Trust revealed that fewer houses are under construction now than at any time since 1924 – the message was that this was enough to guarantee strong demand.
The firms no doubt hope that they have done enough now to calm the City, and that when the slowdown does come, it will be expected, and even welcomed by investors relieved that the damaging house price inflation is over.
There is some evidence that the rapid rate of house price inflation seen earlier this year, and now showing through in published statistics, is moderating to more sustainable levels
Wimpey, 3 July
Contractors, in comparison, have not handled their PR battles as adroitly. PFI deals are very popular among investors, who welcome the prospect of long-term income streams, but there are still concerns about the government's ability to deliver the projects.
In addition, contractors are still considered by many to be fat cats making millions off the public purse through PFI contracts unfairly weighted in their favour. Their PR battle hasn't been as effectively waged as that of the housebuilders. And adding to the contractors' difficulties, the Major Contractors Group is also losing members and its influence.
Jarvis' handling of the fall-out of the Potters Bar rail smash is another example of the construction sector becoming more aware of the importance of winning over the City. But its decision to claim the crash could well have been caused by sabotage, rather than poor maintenance, was surprising and risky. The firm, which handled the maintenance on the East Coast Main Line, watched its shares plummet in the days following the crash as it emerged that loose bolts killed nine people.
Investors were concerned that if Jarvis was responsible, other rail contracts could be under threat – and rail work makes up about half of Jarvis' profit and turnover. Instead of keeping silent, however, Jarvis went on the attack and blamed sabotage – and even secretly briefed analysts on details of East Coast Main Line maintenance, which indirectly criticised Balfour Beatty, the company previously responsible for the line's maintenance.
The strategy worked in the short term – Jarvis' share price stabilised. But it could still backfire spectacularly when the Health and Safety Executive gives its findings on the cause of the crash. Jarvis must be holding its breath.