WIR PART TWO

Another bad omen was the trading statement from George Wimpey, coupled with an almost mirror-image one from Taylor Woodrow, the company with which it is shortly to merge. Both these companies are exposed to overseas markets that are in trouble, primarily the US and Spain. Predictably, there was plenty of bad news from both quarters: both volumes and prices are well down on last year in the US, with obvious implications for profit. And in mainland Spain, British buyers have headed for the exits in the face of gross oversupply of tatty, poorly built apartments. But both companies were also cautious on the UK, suggesting that the second half will be tougher and that recent interest rate rises will soon begin to bite. The entire sector has seen a severe de-rating over the past three months - suggesting that the stock market is already pricing in a sharp slowdown in house prices. But shares in both Taylor and Wimpey now look so cheap that the merged entity could be considered the stock market equivalent of a renovation project; good value for the long term.