MARKET REPORT: Housebuilders boosted by booming property market

More than £1billion was added to the value of Britain’s biggest builders yesterday as figures showed the housing market was in rude health.

Shares in the top developers rose after the Bank of England said mortgage approvals had reached a 13-year high in 2020.

The Bank said 103,381 loans were approved by lenders in December, taking the annual total to 820,000 – the highest level since 2007. That was also up from about 790,000 in 2019.

Housing boom: Shares in Britain’s biggest builders rose after the Bank of England said mortgage approvals had reached a 13-year high in 2020

It capped something of a rip-roaring year for the market, which was initially disrupted by the pandemic but has since been turbocharged by demand for bigger homes and Chancellor Rishi Sunak’s stamp duty cut.

The news that sales had continued apace at the close of the year helped to lift house builder shares despite uncertainty about how this year will compare.

Persimmon rose 3.4 per cent, or 86p, to 2637p, taking its market capitalisation £274million higher to £8.4billion.

At the same time, rival Barratt rose 3.8 per cent, or 24.2p, to 663p, taking its value up by £246million to £6.8billion, and Taylor Wimpey rose 3.8 per cent, or 5.55p, to 152p, with its value increasing by £202million to £5.5billion.

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In-game advertising specialist Bidstack slumped 32.1 per cent, or 3.45p, to 7.3p after a year of rapid expansion sent costs soaring and it warned it could take longer to secure deals.

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AIM-listed Bidstack inserts adverts for the likes of KFC and Burberry into video games by putting them in places you would find them in the real world, such as billboards.

The business racked up a £7.2million loss in 2020 – up from a £5.4million loss the year before despite revenues surging from £140,000 to £1.7million.

Berkeley rose 3.8 per cent, or 160p, to 4349p, taking its market cap up £199million to £5.4billion, and Bellway rose 2.5 per cent or 68p to 2823p, making it worth £3.5billion, up £84million.

Russ Mould, investment director at AJ Bell, said: ‘Mortgage availability seems to be good, interest rates are anchored and demand for housing still seems to exceed supply, which bodes well for pricing, margins and profits for housebuilders.’

However, Pantheon Macroeconomics said the figures also showed that ‘demand has begun to fade’ compared to the peak months of 2020 – and that rising unemployment could further hit the market in 2021.

Samuel Tombs, its chief UK economist, added: ‘Unless government policies change, we expect house purchase mortgage approvals to drop below their 2010-to-2019 average level in the remaining three quarters of this year.’

The gains by blue chip house builders helped the FTSE 100 to start the week in positive territory, with the index rising 0.9 per cent, or 58.96 points, to 6466.42.

The FTSE 250 index of mid-sized companies rose 0.8 per cent, or 164.04 points, to 20392.62.

Property giant Land Securities was also up, rising 1 per cent, or 6.3p, to 621p, after announcing it would pay a third quarter dividend of 6p per share. It follows a 12p payment for the first and second quarters of the 2020-21 financial year. 

The latest divi will be paid on March 30, the company said.

LandSec had previously cancelled the divi last year to conserve cash during the pandemic, which has hammered property values and caused some of its retail tenants to experience money troubles.

But rival Hammerson tumbled 7.6 per cent, or 1.77pc, to 21.39p and West End landlord Shaftesbury fell by 3 per cent, or 16.5p, to 543p as investors mulled the impact of the ongoing national lockdown.

Travel giant Tui also dipped 4.1 per cent, or 14.6p, to 338.4p as EU countries, including France and Portugal, put fresh restrictions on travel, including trips abroad.

One coronavirus winner, however, has been healthcare provider Totally. The firm runs walk-in clinics, call centres and out-of-hours GP services for the NHS, helping to alleviate pressure on services.

Yesterday shares rose 4.7 per cent, or 1.5p, to 33.5p after it revealed its contracts with certain NHS trusts in England, worth £16.8million, had been renewed.

Medical technology and equipment firm BATM Advanced Communications rose 7.4 per cent, or 7.5p, to 109p after reporting strong sales in the second half of 2020.