Bovis Homes: Sales rates holding up

LONDON: British housebuilder Bovis Homes said it swung to a first-half pre-tax profit while sales rates are holding up during the sluggish summer period, despite confidence in the sector tailing off.

"We have seen a remarkable stability of sales rates week on week, clearly people talk about the summer being quieter than the spring, we've seen a bit of that," said chief executive David Ritchie. "But each week we appear to get over the line in terms of the number of houses we need to sell," he added.

Both the Royal Institution of Chartered Surveyors and mortgage lender Nationwide reported seasonally adjusted falls in selling prices last month.

Asking prices for homes in England and Wales fell by 1.7% in August, according to property website Rightmove. Prices fell by their biggest margin since a 2.2% decline in December.

This, alongside retail sales growth slowing, is raising concerns that the recovery may be losing momentum.

Confidence in the economy has taken a sharp knock since Britain's coalition government revealed plans to slash spending by as much as a quarter to bring ballooning national debt under control.

Meanwhile mortgage levels hit their lowest level in more than a year in July according to data from the Bank of England as access to affordable mortgages remains constrained

Rival Bellway said earlier this month that the quieter summer months were not indicative of another slump in the UK housing market.

But the sector is waiting with anticipation for a stabilising macro economic picture of a pick-up in Autumn trading to give it greater comfort.

Bovis reported a pre-tax profit in the six months to end-June of £3.5 million (RM17.08 million), against a loss of £8.6 million in the same period last year, at the lower end of analyst expectations.

The consensus for full year expectations is £13.65 million, according to a Thomson Reuters I/B/E/S poll of 14 analysts.

"1H PBT a little disappointing: made £3.5 million against Liberum estimate of £4.6 million, as sales a little light," said analysts at Liberum.

Shares in Bovis, which have been bumping along the bottom in line with the sector after hitting an 18-month low in early July, were up 0.40% at 0738 GMT.

Ritchie said that the group is maintaining 26-27 sales per week, which will it enable it to meet its full year volume target of 1,600 private completions if sales continue at the same rate.

The builder said it boosted its land bank by 1,874 consented plots and completed 803 units in the first half at an average selling price of £163,500.

Meanwhile Irish building materials group Kingspan said on Monday, Aug 23 it would resume paying a dividend, following in the footsteps of Bovis. — Reuters