The increasing stock market value of housebuilders will hinder mergers and takeovers, according to a report published last week.

The report, from research company Market & Business Development, said although the consolidation drive was likely to continue, some potential deals would fail because of the share price increases.

The report said: "As the market has recently improved, the price of target acquisitions will increase, and this could deter some of the potential concentration of the sector."

Housebuilders' values have risen steadily over the past 18 months, with potential targets, such as Bellway and Swan Hill, enjoying surges in their prices.

As the market has recently improved, the price of targets will rise

Market & Business Development report

Berkeley managing director Tony Pidgley has ruled out a merger or takeover because of the higher asking prices or premiums that he would have to pay. Some in the City believe that the £461m Wimpey paid for Alfred McAlpine Homes last summer was too high.

The report also said the push for consolidation is hindered by the fragmented nature of the UK housing market, which has a few national operators and a larger number of small regional businesses.