Bad Christmas: Housebuilder share prices are falling
Shares in the UK's largest housebuilders fell today, after a profit warning from one, as well as disappointing mortgage figures.
Bovis was the biggest faller on the FTSE 250, with shares falling 4.8 per cent to 815.5p in lunchtime trading after it warned on profits, saying it expected to complete on fewer homes than anticipated this year.
Disappointing mortgage lending figures compounded things, with figures published this morning by the British Bankers' Association showing the number of approvals for house purchase fell nine per cent in November.
That caused Crest Nicholson to fall 2.5 per cent to 435p, while Countryside fell 1.9 per cent to 241.7p and Berkeley Group fell 1.3 per cent to 2,815.5p.
Among the FTSE 100-listed builders, Persimmon dropped 1.4 per cent to 1,740p, while Barratt fell 0.6 per cent to 466.4p and Taylor Wimpey fell 0.3 per cent to 202.6p.
"The fact that the housing market is seemingly struggling to build momentum after coming modestly off its August lows reinforces our suspicion that it is likely to find life increasingly difficult as 2017 progresses," said Howard Archer, chief European and UK economist at IHS Markit.
"Housing market activity and prices are also likely to be pressurised by stretched house prices to earnings ratios and tighter checking of prospective mortgage borrowers by lenders.
"According to the Halifax, the house price to earnings ratio was 5.68 in November, having reached 5.69 in October which was the equal highest level with June since October 2007. This is well above the long-term (1983-2016) average of 4.18," he said.
"Furthermore, the more uncertain and weakened outlook for the economy could make mortgage lenders tighten their lending standards and possibly even look to increase their margins on mortgages."