Housing market anticipates confirmation of recovery
 Housebuilders set to publish forecasts showing improved conditions for investors as government schemes bolster market Confirmation of a recovery in the housing market should be provided this week from the UK's biggest housebuilders, which are publishing results that are expected to be buoyed by government schemes to bolster the market. The report from Bovis is scheduled for Monday, followed by results from Persimmon, Taylor Wimpey and Redrow and Barratt by the end of the week. "Easing credit conditions, rising consumer confidence and Help to Buy have underpinned the strongest trading conditions for the housebuilding sector since the downturn," said Gavin Jago, a research analyst at Shore Capital. "Despite upward pressures on build costs and land prices, we forecast significant earnings growth in the medium term and growing income attractions." The improving conditions are expected to help unleash bonus payouts for top bosses. The Observer reported that Pete Redfern, chief executive of Taylor Wimpey, was on track to be handed £4.5m of stock in April, and the former head of Persimmon, Mike Farley, almost £3m. The first part of the government's Help to Buy scheme offers buyers an interest-free loan of up to 20% of the purchase price of a newbuild home with a value of up to £600,000. Developers have credited the scheme with improving sales figures in the south-east and beyond. Although figures released by the government last week showed a fall in the number of homes completed in England in 2013, housing starts have increased. Barratt said its private reservations had been raised by more than a third, while Taylor Wimpey pointed to "a meaningful step change in market conditions in 2013", which allowed it to increase completions by 7% on the previous year's figure. Its selling prices were up by the same amount, it said. Jago said: "House builders have responded to growing demand by significantly increasing output. With lower competition in the land market in recent years, the sector has amassed a strong land bank with high embedded margins." Douglas McNeill, of the stockbrokers Charles Stanley, said investors would be watching out for Persimmon's annual results on Tuesday to see what the company had to say about the state of the housing market as the traditionally busy spring period approached. "The share-price level suggests investors believe the company will continue to increase revenues and margins for the next few years on the back of a continuing recovery in demand and gently rising house prices," he said. Matthew Pointon, at Capital Economics, said builders would want to expand their land acquisitions. But he added: "With material and labour constraints starting to bite, and with demand dependent on a temporary government subsidy, the pace of housebuilding is likely to slow over the second half of this year." theguardian.com © 2014 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds |
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