Mar City's (MAR:AIM) trading update lifts shares in the Birmingham-headquartered housebuilder at a time when many of its peers are struggling to recapture momentum in a buoyant but potenially overheating housing market.

Mar City's stock adds 4.2% to 124p after the group's trading update assures investors that strong progress in the first half should be matched in the second half. Core geographies of the Midlands, London and the South East are experiencing increased levels of activity amid strong buying demand.

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Trading in the six months to the end of June 2014 has seen Mar City delivering significant growth, with completions tracking comfortably in line with internal budgets. Going forward, management has increasing confidence for the full year as the group's innovative modular construction methodology feeds into demand for affordable housing.

When last we highlighted Mar City in a feature on cutting edge construction opportunities in Shares (3 April) the group was keen to showcase its 102-apartment Green Point development in Colindale in North London. Using its own facility in Nottinghamshire, the modular building is prefabricated and then transported to site where it is craned into place and secured in a process that neatly manages to sidestep both skill shortages and labour-related margin pressures in the industry.

80 of the 102 apartments due for completion by September have already been pre-sold with the remainder due for open market sale in due course. The dynamics are similar at the company's Leamore development in the Midlands, with strong levels of pre-market interest, according to the company.

But the sustainability of Mar City's momentum will not just depend on market buoyancy and margin vigilance. The importance of topping up the group's landbank cannot be overstated, particularly as land price inflation becomes a more influential variable. Since reporting to shareholders at the company's AGM in May, Mar City has acquired control of a further 472 plots across the Midlands, London and the South East.

This is very much in line with management's strategy of building a three to five year land bank, whilst at the same time maintaining target intake margins on new land purchases. Investors looking for key performance indictaors on this metric should, at year-end, be assessing whether or not Mar City has achieved its stated aim of securing a total of 3,000 plots by 31 December 2014.

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Issue Date: 30 Jun 2014