Sector: Housebuilders

Shares in London’s quoted housebuilders have moved higher after FTSE 250 constituent Redrow said it would return to profit in the first six months of 2010.

Redrow, chaired by Steve Morgan, informed investors that it had been ‘encouraged by sales activity since the start of the calendar year’, with ‘sales rates per outlet comfortably ahead of the same period last year’. In a further sign of sector revitalisation, the company said that weekly visitor levels and cancellation rates had ‘remained reasonably consistent’ throughout the period.

Morgan added that house prices had remained stable since the start of the year, though ‘our average selling price of private homes has increased in comparison with both the prior year and the first half of this year’, due to a planned change in mix.

He expects the group to complete more than 2,500 homes for the full year, which will result in a return to profitability for the second half. In a further positive, Morgan flagged up net debt of £50 million, ‘well within the group’s committed bank facilities of £250 million’, though debt levels will rise over the coming months ‘as our land bank increases’.

Responding to the news, shares in Redrow, which reported a £141 million pre-tax loss for the year to June 2009, edged up 2p to 153.1p, still some way off peaks north of £5. Basking in some upbeat news for the sector, Barratt Developments sparked up by 5.5p to 137.4p, Bellway received a 15p boost to 815.5p and Persimmon put on 11.7p to 510p.

Yet further interest in the sector was drummed up by market chatter suggesting that entrepreneur Hugh Osmond wants in on the housebuilding market. Reports say the pizzas-to-pubs tycoon has tabled a £350 million offer for Crest Nicholson after meeting with its bankers. Apparently, his Horizon acquisition vehicle has a shopping list of companies that have been hit by debts and the economic downturn.