Market watch: Cold comfort for housebuilders

After a subdued autumn season, the pre-Christmas performance is likely to have been held back by the adverse weather during what is already a quiet time for the housing market.

Nationwide Building Society cheered the sector by posting a 0.4 per cent rise in house prices in December - the first hike since May.

However, it said house prices were expected to drop in the first half of 2011 and the market will be keen for the builders' views, given the recent swathe of gloomy predictions.

Persimmon will be first in the spotlight with its update tomorrow. The group was among those to warn it failed to experience the traditional autumn pick up in the housing market when it last updated in November.

However, it assured investors by reporting that sales volumes had remained stable with prices and margins holding firm despite the wider market troubles.

Persimmon said it was on course to increase sales by 10 per cent in 2010, although it was under no illusion of the challenges ahead, with mortgage lending constraints and the impact of government spending cuts.

Fellow builder Barratt Developments, which updates on Wednesday, described the same trends during the autumn and echoed sentiments over the hurdles that lie ahead.

In spite of these concerns, analysts at Panmure Gordon have both Barratt and Persimmon on "buy" recommendations and said fears for the sector were overdone.

Weather-driven profit warnings from Mothercare and Clinton Cards have fuelled nerves ahead of Thursday's update from car parts and bicycle retailer Halfords.

The group is seen as being susceptible as many of its 462 stores are out of town, which are likely to have proved hard for many customers to reach in December's snow and ice.

Halfords' sales were under pressure before the snow disruption as warehouse problems and poor sales of bicycles left half-year trading down 4.9 per cent on a like-for-like basis, followed by a 5 per cent decline in the first six weeks of the second half.

Bike sales were a particular disappointment, down by 1 per cent in the second quarter due to poor availability caused by teething problems with Halfords' new warehouse in Coventry and problems with suppliers in the Far East.

This may have been compounded by the snowfall, according to Arden analyst Nick Bubb.