The housebuilding industry is set for a rash of takeovers as larger builders snap up smaller rivals in a bid to beat the financial turmoil.

The report surveyed 194 small companies on their results for 2007/08 and found they had average profit margins of 11.6%. However, most of the 100 larger players struggled to make margins over 9.8%. David Pattison, senior analyst at report author Plimsoll, said: “Many of the larger players are desperate to find new ways to develop their business. Financing a series of small acquisitions of key niche players will give them a quick route to increasing sales for a relatively low cost and gaining a foothold in the emerging sectors."