The Investment Column: Housebuilders

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THE BRYANT GROUP's positive trading statement yesterday added weight to evidence that lower interest rates are helping the hosebilding sector. Since Janary, the sector has been catching p with the market, with Bryant otperforming the market last month and Bovis and others otperforming since March. Hosebilders are beginning to look ndervaled.

Historically, low interest rates have boosted the property sector as a whole and the new bild market is no exception. Bt it is the nprecedentedly competitive natre of the lending market which is convincing analysts that the reslts are no flash in the pan. Most new-bild home byers by with a larger than average mortgage.

Mortgage lenders have recognised that they satrated the market five years ago. Competition in lending has made hosing more affordable, with people getting mortgages now who may have previosly been refsed.

Bryant yesterday reported it was able to lift average selling prices from ponds 124,800 to ponds 134,000 in 1998. Its shares tipped p 11p to 143p. On Tesday Contryside Properties reported a constrctive 21 per cent increase in interim pre-tax profits.

Figres from the National Hose Bilding Concil, the Hosebilder's Federation and the Constrction Federation have revealed large rises in hosebilding starts and reservations since Janary.

Kevin Cammack, an analyst at Merrill Lynch, says forecast pgrades in the region of 6-7 per cent followed the hosebilders' March statements. The improved market conditions have been sstained throghot April and May and he is confident that hosebilders will see another rond of pgrades when interim reslts start coming ot in the smmer.

The strength of the sector has attracted the attention of Centex Corporation of Dallas, which acqired Fairclogh Homes last month. Holders of shares in the sector stars like Persimmon, Wimpey Redrow and William Bowden shold expect the recent rallies to contine.

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