The eight major housebuilders reporting in the coming weeks are all expected to do well, although the report predicts that Redrow will increase its interim pre-tax profit by only 5%. Redrow's performance should improve in the second half of its financial year, and it is thought that it will have the most improved dividend pay out to shareholders by the year end.
In the past 12 months housebuilders have outperformed the stock market average by more than 12%. It has done this despite interest rate increases, anticipated changes in VAT and questions over the sustainability of house price inflation – the market still remembers the property collapse after the 1980s.
Some housebuilders have recently released positive trading statements, and several, such as Persimmon, have had their predictions upgraded by T&G housebuilding analyst Kate Moy.
The key is, who can deliver in 2004? Taywood and Wilson Bowden seem to have it in the bag
Kay Moy, analyst, Teather & Greenwood
She said: "Expectations have been raised since the beginning of the year. The trading statements in December and January have been in line with or above expectations, and we have raised a couple of companies on the back of these."
But Moy warned that the coming year might be more difficult as housing inflation started to fall. This would mean that pre-tax profit growth would be more in line with turnover, which has increased at a slower rate.
Moy said that the more acquisitive housebuilders should be among those setting the pace this year. She added: "The key is, who can deliver in 2004? Taylor Woodrow and Wilson Bowden seem to have the year in the bag because of recent acquisitions. Persimmon too, because I think they will make an acquisition."
Barratt and Bellway are also anticipated to do well because of their low overheads and the amount of land they have for development.
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Housebuilders’ pre-tax profit growth
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