Bovis strikes upbeat note for Britain’s housing market amid overhaul
The housebuilder said it was on track to meet full-year targets after revealing it was fully sold for 2017 and saw growth in its sales rate edge higher.
Bovis Homes has cast aside housing market fears as it reported “robust” demand for new properties and said industry fundamentals remained strong.
The housebuilder said it was on track to meet full-year targets after revealing it was fully sold for 2017, and saw growth in its sales rate edge higher to 0.52 between July 1 and November 10, up from 0.48 during its first half.
Its average selling price is set to increase by year-end, while “demand for new homes continues to be robust across all our regions and customer interest remains good”.
The update comes after fellow builder Taylor Wimpey shrugged off industry concerns over a cooling property market on Monday, cheering high demand for new housing.
The bullish report saw Bovis shares rise more than 1%, while it also sparked gains across the housebuilding sector, with Persimmon, Taylor Wimpey, Barratt Developments and Bellway moving higher.
Greg Fitzgerald, chief executive of Bovis, said: “Trading is in line with expectations, the market remains strong, and we are on track to deliver another disciplined period end.”
The group said “industry fundamentals” were strong thanks to support from Government housing policies including Help to Buy and a “competitive” mortgage market.
It also said the lower interest rate environment should also help, though some experts fear this month’s rate rise from 0.25% to 0.5% – the first for a decade – could add to Brexit uncertainty and put off buyers.
The upbeat outlook from Bovis and Taylor has helped ease worries over the sector after gloomy reports last week from rivals Persimmon and Redrow and industry data pointing to slowing sales and prices.
In its update, Bovis said it was also reaping rewards from a company-wide efficiency programme, which is aiming for at least £180 million in additional cash flow by the end of 2018, having sold off its shared equity portfolio for £21.9 million and made two land sales that brought in proceeds of £12.9 million over the trading period.
Mr Fitzgerald said the group is expected to have a cash position of “at least £100 million” by the end of December.
Customer satisfaction averaged 75% on completions since February, Bovis said, which is good news given that the company is still recovering from compensation costs linked to poor build quality of some homes.
The company has already set aside around £10.5 million for affected customers after some homes were sold unfinished and had electrical and plumbing faults.
Robin Hardy, an analyst at Shore Capital Markets, said: “Bovis is getting on with the new tasks of releasing surplus cash from the balance sheet and righting the ship from the major quality and production problems that began to bite from this stage in full-year 2016.”
However, he highlighted that while the Bovis sales rate was up year on year, it was still lagging behind its peers.