Southern focus pays dividends for Bovis

The Kent-based group completed 944 sales in the first half of 2012 even though buyers are still struggling to get affordable mortgages and are taking longer to make decisions amid the economic uncertainty.

Its strategy of building family homes in the more affluent south means it is on course for a “significant” rise in profits, helped by a one per cent rise in average prices to £164,400.

Reservations were up 24 per cent to 993 in the first half, of which more than 10 per cent had used the Government-backed NewBuy scheme, which encourages the return of 95 per cent mortgages.

Although trading slowed around the Jubilee celebrations, it is confident about its prospects after agreeing to buy some 2,500 new plots and said cheaper land bought in the wake of the financial crisis will help boost margins.

It followed rivals Persimmon and Taylor Wimpey in reporting resilient trading.

Panmure Gordon analyst Mark Hughes said Bovis had made “excellent progress” and raised his profits forecast for 2012 by £1.6m to £47.6m, compared to £32.1m last year.

The group expects its strategy of building larger homes in the south will help the average price of private completions to rise above £200,000 in its second-half, compared to about £175,000 in the first half.

Bovis, like many housebuilders, enjoyed a busy spring season as first time buyers rushed to take advantage of a stamp duty holiday.

There had been fears the sector would report a sharp fall-off in sales after the deadline expired but housebuilders have in recent weeks suggested that demand has remained resilient, helped by the Government’s NewBuy scheme, which Bovis said was growing in popularity.

However, the number of housing transactions is still running way below the pre-financial crisis peaks after lenders started asking for bigger deposits, pricing many first time buyers out of the market.