House-builders face threat from rising prices, Westhouse warns

5th Jun 2014 11:56

Action to cool the booming housing market could hit house-builders such as Bellway despite the upbeat mood in the industry, Westhouse Securities said on Thursday.In a trading statement, Bellway said demand for new homes had stayed robust in the four months to May and predicted a 20% rise in the number of legal completions in the year to July 31st.Westhouse said Bellway's comments continued the trend of house-builders avoiding any sign of the wobbles affecting the wider housing market - possibly because of the UK government's Help to Buy shared equity scheme.But the broker warned that the buoyant industry sentiment appeared at odds with wider market jitters about soaring house prices and the prospect of a bubble.Westhouse outlined a range of potential threats to transactions and prices including tighter mortgage lending rules launched in April, a possible clampdown on lending criteria by the Bank of England later this month, caps on larger mortgages imposed by Lloyds Banking Group and Royal Bank of Scotland, possible curtailment of Help to Buy, political uncertainty before next May's UK General Election and a potential interest rate rise.The Bellway update also came as Halifax said house prices had risen 3.9% in May despite a slowdown in mortgage approvals.Westhouse said: "We believe today's Halifax House Price Index edging closer to the "danger zone" of 5x incomes may raise fears of an impending rates rise, which could more than offset Bellway's sanguine tone in terms of share price sentiment in the sector."Westhouse said it was keeping its neutral recommendation, target price of 1,411p and estimates on Bellway.Shares in Bellway rose 18p or 1.3% to 1423p at 12:22 in London.PW