Bovis has announced that it built a record number of houses in the first half of 2015, boosted by soaring demand for property in London and the south of England.
The company, which builds three-quarters of its homes in the capital and the south-east, reported that its average sale price had risen to £264,000, 10% higher than last year.
Bovis’s chief executive, David Ritchie, dismissed suggestions that houses were becoming unaffordable. He told BBC Radio 4’s Today programme that £264,000 was the price of a medium-sized, three-bedroom house in the south-east of England and was a reasonable price for that type of home in that area.
A survey by the property website Rightmove found the average house price across England and Wales was £292,284.
Bovis completed a record 1,525 homes in the first half of 2015, a rise of 2.5% on last year that helped lift pretax profits by 9% to £54m. The company earned revenues of £351m and told shareholders it was on track to meet its housebuilding target for the year.
Bovis’s growing fortunes are a sign of the revived housing market in the south-east of England. House production to 11 August was running 11% higher than last year. The company is aiming to expand by building between 5,000 and 6,000 homes a year in the medium term.
In a statement to the City, Ritchie said the company’s growth plan was on track and promised shareholders they would see returns on their investment as the company continued to expand its land bank.
“With positive market conditions prevailing, we continue to assess the housing cycle and will adapt our strategy appropriately. We anticipate that the addition of around 40 sites per annum will support our medium-term growth strategy to deliver volumes of between 5,000 and 6,000 new homes each year.”
Bovis has also promised to increase its full-year dividend to 40p per share, from 35p in 2014. The tight supply of housing means that housebuyers are not benefiting much from the traditional summer-holiday lull in the market, which usually depresses asking prices.
The Rightmove survey showed a 0.8% fall in month-on-month in asking prices, less than usual.
“Buyers can normally pick up some bargains in August as sellers who are marketing their homes when they should be holidaying often have a pressing need to sell and mark their prices down pretty aggressively,” said Miles Shipside of Rightmove.
“At 0.8% down on the previous month, this is the least generous that sellers have had to be for eight years and a clear sign of upwards price pressure in the pipeline.
“Rightmove’s research into why more sellers are not coming to market found the top reasons sellers are holding back are that they cannot find anywhere they want to buy, they are being put off by moving costs and that they cannot find a property they can afford.”
