House builders tap investors for £1.6bn

Major house builders are rushing to the markets to raise cash for a land-buying spree, announcing plans to tap investors for £1.6bn since the start of the year.

This month alone, four firms have attempted to tap investors for a total of almost £1.1bn.

Barratt and Redrow were the two latest firms to take out the begging bowl. Barratt indicated last week that it would raise £545.5m in a rights issue and £175m through a placing in a bid to repair its balance sheet.

Redrow's chairman, Steve Morgan, said that his firm would launch a £150m rights issue, after encouraging signs in the property sector.

Commenting on the state of the house building market, Capita Symonds' Nottingham director, Richard Hall, said: "Land is cheap and there is a shortfall in housing, so people are seeing their chance. A lot of the smarter firms are moving now and contractors, house builders and large land holders are realising there are deals to be done. We have been bouncing along the bottom of the market for a few months and confidence is now returning.

"One house builder told me that he only needs a 5% rise in house prices to have a dramatic effect on land values, which will unlock the market. In planning terms, we are seeing more instructions looking at the next 12-month to 3-year period."