Loans key to homes surge
COST-cutting and price rises helped housebuilder Bovis Homes to double first-half profits but it said more home loans were needed to kick-start a flat market.
Bovis reduced the cost of building a house to about £88,000 from around £100,000 in 2008 by slashing wages and spending less on materials.
Average sale prices rose by 3.2 per cent to £163,400 as Bovis focused on opening more profitable sites with larger 3-5 bedroom homes. It completed 801 deals in the half against 803 last time.
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The group found it easier to sell houses in southern England than in the Midlands or North, although prices are holding up in some northern areas such as Cheshire.
Bovis’s first-half pre-tax profit rose to £8.1million, from £3.5million a year ago on a 16 per cent rise in revenue to £134million.
Chief executive David Ritchie said the business was growing
Chief executive David Ritchie said the business was growing but a lack of home loans was holding back the market, particularly for first-time buyers. The group has been offering shared equity deals to help people on to the housing ladder but is trying to move to more sustainable insurance-based support.
He said: “There are plenty of people who would love to buy but are struggling to get a mortgage.
“We’re working hard to understand what the banks need but until they see mortgage lending being an attractive place to put their money, they won’t put it there.”
Ritchie said a double-dip recession was unlikely but the market was flat and unlikely to improve significantly unless mortgage availability increased.
He added: “There’s enough reason to believe we will see a slow and steady recovery with the occasional hiccup along the way but it will depend on the banks’ appetite to lend.”
Panmure Gordon advised investors to buy as shares rose 18½p to 369½p. It said: “These results are strong and ahead of our expectations.”.