House builders not inflating prices

LONDON (Reuters) - House builders are not artificially inflating house prices by cutting off supply or hoarding land, according to a report from the country's consumer watchdog published on Thursday.

"We have found the homebuilding market to be generally competitive, with no evidence that individual homebuilders have the ability to restrict supply in order to inflate prices or to hoard land for anti-competitive reasons," Office of Fair Trading Chief Executive John Fingleton said in a statement.

However, following the year-long study, the OFT concluded that new home buyers face a number of potential problems, including delays moving in and faults in their home.

It also expressed concerns about some industry-wide contractual terms and conditions, reservation fees and the clarity of information provided to buyers.

In response to the concerns raised by the report, house building industry bodies have agreed to develop a code of conduct and redress scheme for consumers, intended to be fully in force by March 2010, the OFT said.

"To be honest, both conclusions in the context of the wider challenges being faced by the industry at the moment are pretty insignificant," one analyst, who asked not to be named, said, referring to Britain's slumping property market.

Shares in house builder Persimmon (PSN.L) Plc. were off about 1.8 percent at 9:50 a.m., while rival Barratt Developments (BDEV.L) was down 1.3 percent. Taylor Wimpey (TW.L) was 1.6 percent weaker and Bovis Homes (BVS.L) was off 0.8 percent.

(Reporting by Simon Meads; editing by Simon Jessop)