Housing revival 'hits hitch'

The housebuilding recovery is stalling, strangled by a lack of first-time buyer affordability, according to one leading industry analyst who is telling his clients to get out of the sector fast.

Robin Hardy at KBC Peel Hunt said last week's homebuilders' reporting season has revealed "clouds are on the horizon" which will hurt the profit margins and market ratings of companies in the industry.

Those results revealed that builders fear rising commodity prices will lift the cost of materials which it may be difficult to pass on in the price of a completed home.

Hardy said signals for the immediate prospects for the market are there to read.

"We normally set little store by [property website] Rightmove's comments but when a deeply interested party reports a negative trend and promises three months of the same, we take notice," he said.

"The Council of Mortgage Lenders is also hawkish saying we expect only a modest improvement in the housing and mortgage markets next year'. It is also notable that the housing bill, set to treble the social housing budget from fiscal 2010, was not in the Queen's Speech."

Hardy says investors' money may be better off in the home improvement market such as Travis Perkins, Topps Tiles and B&Q group Kingfisher."