Upbeat Bovis sees buyers flock back to the market

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Housebuilder Bovis Homes said its order book is at its strongest in many years and it is seeing robust demand for its homes in the early weeks of 2014, as buyers backed by the Government help boost the housing market.

In a trading update ahead of its full year results, the company said it had 1,377 forward sales marked for 2014 delivery at January 1, 77 per cent higher than at the same point last year.

Bovis said it would post a “significant” rise in profits in 2013, driven by the completion of more homes, higher average sales prices and an improvement in its profit margin.

Analysts expect Bovis to post full year pre-tax profits of between £74m to £79m, on revenues of £516m to £554m.

It completed 26 per cent more private homes compared with the prior year, while a move to build more lucrative family homes in higher value areas boosted its average sales price by 14 per cent to £195,100.

Its operating profit margin over the year rose to approach 15 per cent, up from 13.3 per cent in 2012.

Britain’s housebuilders have enjoyed a strong return in buyer demand over the past year thanks to the Government’s move to help aspiring homeowners, which has stoked demand for their newly built homes and wider market sentiment.

Earlier this week, rival builder Barratt Developments said it is looking forward to a strong second half, following a 71 per cent rise in total forward sales in its first half.

Barratt Homes in Yorkshire plans to launch 23 new sites this year, including sites in Wakefield, Otley, Doncaster, York and Hull, supporting nearly 3,000 jobs to build and sell the new homes.

The housebuilder employs local sub-contractors and tradesmen and said that local businesses and people will benefit directly from the jobs.

Following a painful few years triggered by the housing market collapse, UK housebuilders have bounced back on Government efforts such as Help to Buy.

A spokesman for Barratt Homes in Yorkshire said: “The really great news this year is the continuation of Help to Buy Equity mortgages, which means home movers can get on the ladder with just a five per cent deposit, a 20 per cent equity loan, and a 75 per cent mortgage.”

The scheme has stoked sentiment and driven transactions over the past year.

Rival housebuilder York-based Persimmon triggered market upgrades last week after it posted a 21 per cent rise in 2013 revenue, at the top end of analyst forecasts.

Barratt said total forward sales, excluding joint ventures, over the six months to December 31 jumped to £1.27bn, from £742.1m, equating to 7,007 plots.

It increased total home completions over the period by 19 per cent to match the surge in demand.

Net private reservations per active site rose 36.7 per cent over the period.

Mr Clare said the company is using 15 per cent more labour to deliver a higher number of homes.

Analysts expect Barratt to report pre-tax profits of between £323m and £359m on revenues of £2.82bn to £2.98bn.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “Barratt’s status as a recovery play continues apace, with an update which underlines its ability to capitalise on the resurgence of the UK property market.

“Along with its previous strategy to invest in new land at depressed prices over the last few years, the company is reaping strong rewards.”

ros.snowdon@ypn.co.uk