Who's next? - City forecasts more consolidation

Wimpey's shock acquisition of Alfred McAlpine's housing division will not be the last such move among the country's major housebuilders, according to City analysts.

"Smaller companies won't be able to survive in the current climate," according to Deutsche Bank housing analyst, Daniela Lungu. The predicted slowdown in the economy is likely to provide little relief for small housebuilders from predators. "In a slowing economy investors will still be looking for companies with high turnover and capable of cutting costs," said Lungu.

This year has seen a flurry of buying and selling among the industry's top players with Persimmon acquiring Beazer, Taylor Woodrow snapping up Bryant and Wilson Connolly absorbing Wainhomes.

Last month in a move that even took analysts by surprise Wimpey joined the fray, acquiring Alfred McAlpine Homes for £440m. The latest deal is expected to produce savings of £18m a year, but will result in 450 more industry job losses.

Smaller companies won’t be able to survive in the current climate

Daniela Lungu, Deutsche Bank

The City has long been pushing the housebuilding industry to consolidate.

"Share investors like bigger stocks to play with because they want liquidity," said John Carnegie, housing analyst at Schroder Salomon Smith Barney. "Operationally, there is no reason for housebuilders to consolidate, although there are economies of scale to be gained in areas such as procurement."

Both major and medium-sized players are vulnerable to takeover, says Carnegie. "To be safe a company needs a market capitalisation of over £500m." This theoretically puts Bovis, Westbury, Bellway, Redrow, Wilson Connolly, McCarthy & Stone, Laing, Prowting, Gleeson, Countryside, Crest Nicholson and others all in the frame, but some are protected from hostile bids as founding families are substantial shareholders.