The housing market and specifically housebuilders Bellway PLC (LSE:BWY) and Barratt Developments PLC (LSE:BDEV) will be under the microscope again, with share prices having an up and down year as higher mortgages bit hard and house prices have felt the heat.
Bellway is scheduled to publish final results on Tuesday and Barratt a first-quarter update alongside its annual shareholder meeting on Wednesday.
In recent weeks we’ve had data from Zoopla showing that house sellers are increasingly cutting prices to secure deals even as the normally busy autumn selling season gets under way, with Halifax last week reporting an acceleration in house price declines on both an annual and monthly basis.
Among latest updates from the listed housebuilders, Barratt’s final results last month were accompanied by news that reservations were down to 0.42 per week since the start of July compared to 0.60 a year earlier, while fellow FTSE 100-listed builder Berkeley Group revealed reservations had fallen 35%.
As for Bellway, in a detailed August pre-close update it warned that new home sales are likely to "decrease materially" in the current year.
It expected revenues to be £3.4 billion for the year, with margins of around 16% that imply operating profits of £545 million.
“We think the key focus will be the outlook and reservation trends in September and October,” said analysts at UBS, noting that most housebuilders last reported in first two weeks of September.
Sales rates, prices and build costs will all be of interest, agreed analysts at Peel Hunt.
“We will also be focused on the planning backdrop and the group’s ability to continue to generate cash should the market remain depressed.”
As for Barratt, UBS expects the trading update covering the first 15 weeks of the new year to show a continued level of reservations trend seen at the last update, maybe even improved to 0.45.
“For FY24, we expect no change to guidance at this stage given the company reiterated a target of 13,250-14,250 FY24 completions last month,” the Swiss bank’s analysts said, estimating total revenue of £4.2 billion in line with the City consensus.
“We expect the key focus will be commentary around the outlook for FY24 and the evolution of the forward order book.”