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Builder Bellway finding it tough in the North
THE Yorkshire house market is set to experience tough trading conditions despite a pick up in the south, according to housebuilder Bellway.
The group said that its northern divisions are still experiencing "testing conditions".
Chief executive John Watson said: "Despite the Government's best efforts to stimulate the housing market through a variety of welcome initiatives, there remains a fundamental shortage of mortgage lending on acceptable terms to potential homebuyers.
"Until this is resolved and the threat of unemployment recedes, consumer confidence in many parts of the country will remain, at best, fragile."
Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers said the UK has now split into a north/south divide.
"There is a two speed UK housing market," he said. "London and the south are clearly enjoying a thawing in conditions, although any warmth has not yet radiated to the north."
Bellway's six northern divisions saw sales tumble 45 per cent to 1,833 homes in the year to July 31. The average northern selling price was down 14.7 per cent to 134,200.
"As the economy in the north receded more quickly, especially in Yorkshire, Scotland and the North West, consumer demand eroded rapidly in these locations, " said Mr Watson.
The group said Yorkshire cities are being held back by an oversupply of high-rise apartments.
"There's still quite a lot of overhang of apartments in cities such as Leeds," said Mr Watson.
Bellway said it is on course for a 10 per cent increase in half-year sales.
Sales for the four months to November 30 averaged 91 a week, up 51 per cent compared with the same period last year, when the global financial crisis triggered a property market slump.
It said reservation prices are also up 16 per cent, reflecting the severe weakness in the property market in the same months in 2008 as well as a different product and geographical mix.
The firm said it was well placed with 79 per cent of the current year's sales target already secured at prices ahead of management expectations.
But Bellway said the property market was still overshadowed by job worries and a lack of affordable mortgages, and it was too soon to call an upturn.
The looming general election is also adding to uncertainty.
"If Labour becomes Conservative, there are bound to be changes," said Mr Watson. "It's another small brick in the uncertainty wall. That just creates a hiatus period. I think it's a natural negative."
The group had an average of 176 sites between August and November, up from 171 sites in the same months in 2008.
It said cancellation rates have reverted to a more normal level of around 13 per cent.
The group said its divisions are gradually increasing investment in new site openings and land opportunities, having spent 64m in the first four months on land, predominantly in the south.
"With 36m of net cash at the end of November, our land teams are actively looking to secure further opportunities at attractive margins," said Mr Watson.
The group said it had a further 600 sales reservations secured for 2010/11.
It added that the operating margin for the year is likely to be towards the higher end of the range of six to seven per cent given at the time of the preliminary announcement in October.
The group said it would update the market again at its Annual General Meeting on January 15.
The great price divide
While the South is seeing good growth, surveyors are seeing a sizeable fall in property prices in Yorkshire and Humber, according to the Royal Institution of Chartered Surveyors (RICS).
In its latest survey, the organisation said 18 per cent more surveyors are seeing price falls in Yorkshire and the Humber region than those seeing rises.
This compares with 22 per cent more surveyors seeing price rises across the country – the highest proportion since May 2007.
The Royal Institution said a lack of properties on the market is continuing to underpin the house price recovery. But it said the improvement was being driven by London and the South East while property prices continue to fall in other areas.
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Tuesday 22 May 2012
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