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House building floats look sunk


IT IS difficult to see the gloom surrounding the house building sector getting much worse. Last week, the combination of Berke-ley Group's warning that the London housing market is slow-ing, the withdrawal of the Morris Group stock market flotation and the cautious view on housing from the Building Materials Producers put share prices under pressure again.

The decision to pull the Morris float was a reflection of its timing so close to the £197 million Bovis float. With share prices in the sector falling 15 per cent to 20 per cent since September, Morris's

appearance with hopes for a £22 million stock market value was deemed to be asking too much of investors.

As it is, the sector has suffered because City sentiment is led by concerns over the London housing market. The experience of firms such as Morris is unlike those selling homes in London - they have seen little of the over-heating and land price inflation.

What the sector is probably in need of is some tangible sign that demand has slowed but has not fallen on the scale of the early 1990s. Until then, it is unlikely that any new house building flotation will be attempted.

Signs of hope from Germany

THE LATEST pronouncement from the German contractor Hochtief presents a familiar picture to observers of British construction.

It says Germany has reached an economic low and is marked by an unsatisfactory level of construction prices, overcapacity and insolvencies. Worst hit, it says, are the pure construction firms.

Yet there are signs of a regional recovery and, for the first time in several years, the Confederation of German Industry is expecting construction in the west of the country to enjoy modest growth.

The outlook for the different sectors remains mixed. The confederation says rents are still falling in the commercial and industrial sectors, housing remains in decline and the public sector is being held back by budget cuts, although the private sector looks more hopeful.

It may be tentative, but if things are looking up in Europe's largest construction market it must be grounds for limited celebration.