Bosses talk of higher margins, and more houses being built, but shares in housebuilding firms remain gloomily low

Something doesn't feel right in the housebuilding sector. Shares are languishing despite a slew of upbeat statements from industry chiefs.

If the worst of the housing downturn is over, stock prices should be heading north as confidence returns – albeit slowly. In fact, market valuations have declined by 30% over the past three months. The City doesn't believe the recovery story being peddled by the housebuilding bosses.

Investors living in fear of a double-dip recession are alarmed at the continued unwillingness of the banks to dish out mortgages. The buy-to-let market has collapsed, and an acute shortage of rental properties is looming. And commentators say that by the end of 2011 house pricescould fall by 10% from the mini-recovery seen mid-way through last year

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