Housebuilders’ shares tumble

Jun 19 2008 by Graeme King, The Journal

EARLIER this week Barratt Developments and Bellway moved strongly higher following a report in the weekend press that funding may be available for the housebuilding sector to stabilise their finances.

However, a report issued yesterday by investment house Goldman Sachs stated that difficult times may still be ahead for the sector. The broker believes that house prices could fall by 6% this year and 8% next year due to the slowdown of sales.

Goldman Sachs noted that the housing market may be at the early stages of a deep downturn which could last up to three years.

Swiss bank UBS also cut its price target for Bellway from 580p to 500p and maintained its “Sell” rating on the stock.

Barratt Developments’ share price moved sharply lower by 11% to finish the day at 80.5p.

Bellway faired little better, moving lower by 10.4% to close at 473p.

Sofa retailer ScS Upholstery has issued several profit warnings since the beginning of the year stating that the credit crunch and the slowdown in customer spending has created a very difficult trading environment for retailers. Earlier this week the group announced that credit insurance has been withdrawn from the market and this has placed a strain on the company’s working capital. ScS Upholstery’s share price moved lower by 35% over the business day to close at 5.25p. The best performance in the Regional Portfolio was recorded by Dermasalve Sciences which jumped higher by 27% to close at 3.5p.

Anthony Peart Anthony.Peart@Brewin.co.uk