WOS.L Share News (WOS)

The National Institute of Economic and Social Research recently lifted its 2014 house price inflation forecast from 0.5 to 5 per cent-plus. No surprise then that the Bank of England decided to redirect the Funding for Lending Scheme (FLS) - in effect taking away the punch bowl. That sent housebuilders' shares tumbling lower by 3-6 per cent on the news. Yet after a near fivefold increase in their stock price over the last five years that is a very modest fall. Policymakers' insist that the Help to Buy scheme will be next. Perhaps, but if price inflation builds, fears of an early winding back of Help to Buy may persist. That will provide an interesting test of housebuilding bulls' claim that the highly cyclical sector learnt a hard lesson in the last crisis. Land prices, however, are not yet exorbitant, for example. Be that as it may, valuations are now rich, with the sector's price-to-book value well over 1.5, "a level rarely sustained for long. Investors should be wary," the Financial Times' Lex column writes. At the end of next month, after the final payment is handed over, along with the £300m special dividend announced in the summer, investors in Wolseley will have recouped the £1bn they were asked to cough up back in 2009 to save the plumber's and builder's merchant. The company now has £469m in net debt, compared to £3bn or so at the peak. It is an extraordinary recovery, by anyone's standards. It has not all been easy, while it has benefitted from a recovery in construction Stateside and solid activity in the UK it recently failed to sell about 140 stores in the North of France. Meantime, the Nordic countries remain depressed. As well, the American shale oil and gas boom means that the country is investing in manufacturing again, and this will come through to future earnings even as housing flattens off. The firm's shares were changing hands at about 17 times this year's earnings on Thursday.? That may look high for a company of this kind, but I would not rule out further gains in the long term, says The Times' Tempus. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB