Tonight:
5°c
The boss of builder Bovis Homes today declared that the housing market is on the road to recovery as sales rise and prices stop falling so aggressively.
“We have been encouraged by a stabilisation over recent months and we are cautiously optimistic that we are near the bottom,” said chief executive David Ritchie. “But we are not out of the woods yet.”
He said rising unemployment, restricted availability of mortgages, and the fear that interest rates will at some stage start rising again could hinder a recovery.
It came as Bovis reported first-half losses of £8.6 million having made a profit of £9.5 million in the same period last year. The firm wrote down the value of the land it owns by £8.9 million. Stripping this out, Bovis reported a profit of £1.2 million.
Bovis sold 901 homes in the first six months of the year — up 92% on the same period of 2008.
The trend continued in July and August with sales so far this year at 1076, 93% higher than this time last year. The firm said overhead costs were down 48% thanks in part to its decision to axe 600 jobs last year. It now has 450 staff.
Ritchie said: “The housing market has shown signs of stabilisation in the first half of 2009, with house price indices indicating that the rate of price decline has lessened over this period and the number of mortgage approvals for home purchase has increased, albeit from a low base. Notwithstanding this, transaction volumes remained at historically low levels during this period and pricing remains substantially below the peak levels of late 2007.
“Whilst this period of relative improvement has been welcomed, the group remains cautious in its expectations on pricing in the short term, given the continuing challenges seen both in terms of mortgage availability and in terms of the approach taken by surveyors in arriving at mortgage valuations. There also remains concern about the possible impact on house prices from rising unemployment and a potential increase in supply of properties for sale in the second-hand market.”
Bovis shares, which fell from 1200p in 2007 to 270p last year, were up 13½p to 551p today.
Analysts at Panmure Gordon said: “In our view, it is by no means certain that these conditions are sustainable and we would expect to see the recent momentum in volume sales subside, while prices continue to erode.
“That said, from a balance-sheet perspective, the group is one of the strongest in the sector and this should leave them well-placed to take advantage of opportunities in the land market.”
Rivals Bellway and Taylor Wimpey both posted positive trading updates earlier this month, supporting data that there is growing stability in the UK housing market. Rival housebuilder Persimmon is expected to report robust trading figures tomorrow.
Reader views (7)
Get up to speed Keith Price. Crash Gordon saved the world, not just the UK economy don't you know....
- Ralphjolly, London, 25/08/2009 00:37
Report abuse
Gosh - another property company giving a bullish view!
wait till a few hundred thousand people come off tracker rates at the end of 2009 - and for unemployment to rise further!
- Bubbles The Chimp, London, 24/08/2009 17:26
Report abuse
That's the last thing the country needs,rising house prices,the only people to benefit from that nonsense is pompous estate agents and solicitors and the money lenders,all the non productive spivs who should not be encouraged,the very same types that caused the recession in the first place.They should be made to sweep the streets if they cant be of more use to society than they are now.
- Kev, London-UK, 24/08/2009 16:11
Report abuse
It's all so well giving good news, but consider this. The houses you built are rubbish, and often badly constructed. (I know I have had two) and/or poor designed or finished. The plots are too small. Your Head Office support is a joke. The real issue is your management at all levels. I used to work for you, so I know. If you are thinking of buying a new house. REAlly really consider who was the builder. I WOULD SAY, REALLY CONSIDER IT.
- Ex Employee, Cheltenham, 24/08/2009 14:43
Report abuse
Just read an excellent piece in one of the broadsheets telling the world that house prices will fall another thirteen percent before the "rebound" - but no mention of when that'll be.
- Ted, London, 24/08/2009 13:13
Report abuse
I say well done Gordon Brown for rescuing the country from the worldwide economic recession, which has hit many other countries far harder than it has us here in the UK
- Keith Price, Luton England, 24/08/2009 11:45
Report abuse
He would say that. Wouldn't he? No vested interests here then?
- Never Eat Tuna Again, London, 24/08/2009 11:42
Report abuse
