Housebuilder says market is improving
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by business editor Trevor Sturgess
Bovis, the
Kent-based housebuilder, has reported signs of improvement in the
housing market.
In a trading update covering the first six months of the year,
the company, with a head office in New Ash Green, near Gravesend,
said conditions had been challenging but it was on course for a
pre-tax profit as the market showed "signs of stabilisation."
The Bovis Group's more upbeat assessment follows similarly
positive recent reports from other housebuilders, including
Persimmon and Redrow.
Bovis said the short term outlook for the housing market
was "a continuation of low levels of activity" constrained by a
shortage of mortgage finance. "House prices appear to be
demonstrating a degree of stability at present, aided by the
current low level of second hand homes being offered for sale
across the housing market."
House price data indicated that the rate of price decline had
slowed and the number of mortgage approvals had risen, albeit from
a low base.
However, Bovis said that sales remained at "historically low
levels" with prices substantially below the peak levels of late
2007.
In a statement, it said: "The continuing lack of mortgage
availability, particularly for first time buyers of newly built
homes, has been challenging for the Group during the first six
months of 2009."
But it added that the group had met the challenge and raised
sales by "competitive pricing," new sales organisation and first
time incentives to help first time buyers. It has also made sales
to housing associations.
Bovis is not paying an interim dividend. Ed Woolfitt, head
of trading at Galvan, said the Bovis statement was "further
evidence of a bottoming out in the housing market. While some
problems still lie ahead, based on the clutch of sector trading
statements this week, the collective view is that the housing
market and sales are slowly but surely on the turn.
"Bovis now looks lean and mean enough to offer some recovery
upside to patient investors, and in the near term the shares could
well move nearer the top of the recent trading range back over
400p."
Bovis completed sales of 754 homes, down 11 per cent. The
average price of homes sold was £160,400 compared to £196,700 in
the first six months of 2008 and £164,700 in the second half of
2008.
Including social and partnership homes, the average sales price
£159,700 compared with £167,600 in the first half of 2008. The
group said it had reduced its stock of unsold homes, leaving unsold
finished stock at around 480 homes.
Bovis has cut costs, jobs and debt, with overheads at £13m some
45 per cent lower than the same period in 2008.
Friday, July 10 2009
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