UK Homebuilders Report Upbeat Results on Track to Meet 2012 Targets

on Nov 12, 2012

**Developers Reassure on UK Property Market as Lending Eases**

British homebuilders Taylor Wimpey (LON:TW), Redrow (LON:RDW) and Bovis Homes (LON:BVS) all released trading updates on Monday (12 November 2012), reassuring investors that despite challenging conditions, the UK property market is recovering. The three big names in the sector said that trading remained steady, with mortgage lending showing signs of easing as a result of recent government schemes aiming to boost construction and help lift Britain’s sluggish economy.

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Redrow and Taylor Wimpey said that while access to mortgage finance was still constrained, government initiatives such as NewBuy – a scheme that aims to help people with smaller deposits buy a new home — and FirstBuy, which helps first-time homebuyers with an equity loan, had helped confidence. Bovis Homes added that margins have also been improved by broadly stable prices in the housing market and generally stronger prices in the south of England.

**Interim Trading on Track to Meet FY Performance Views**
Taylor Wimpey, Redrow and Bovis Homes updated the housing market today on their interim performance, all saying that the current figures are in line with their full-year targets.
Taylor Wimpey, the UK’s second-largest homebuilder by volume, met its target for home completions through 2012, led by private sales of residential real estate. The firm said that sales rates since the start of July had been similar to the equivalent period of 2011, with an average net private reservation rate of 0.57 sales per outlet per week in 2012 to date. This compared to the 2011 equivalent period when the company managed 0.56 sales per outlet per week.

!m[Taylor Wimpey, Redrow and Bovis Homes Confident of Delivering FY Performance in Line with Expectations ](/uploads/story/770/thumbs/pic1_inline.png)Meanwhile, Bovis Homes said it remained on track to deliver “a strong increase in revenue in 2012” and expects its operating margin for 2012 to be around 13 per cent, up from 10 per cent in 2011.
The company added that the average sales price since the beginning of the year for projects expected to complete in 2012 had risen to £190,000, up from just over £180,000 a year ago.

In its update covering the first 19 weeks of this financial year, Redrow also said it continued to make “steady progress”, with sales per outlet up slightly on a year earlier at 0.58 per week. The average price of reservations was 13 per cent ahead of last year at £223,000, reflecting the strength of the London property market, where the firm is focused on.
**Stocks Boosted**
Today, the FTSE 250, home of the trio of UK builders, was a modest 8 points higher at 11,850.39. Bovis Homes displayed the best showing amongst the group, up 1.4 per cent at 522.5 pence. Meanwhile, Taylor Wimpey ticked 0.3 per cent higher to 59.2 pence after its more muted assessment of the housing market, while Redrow missed out on the gains as the fallout from the recent failed bid by executive chairman Steve Morgan to take the company private continued to show its influence. Traders remained focused on the prospect of a significant protest vote about the move at its annual meeting due to be held later in the session. Shares in Redrow were down 1.5 per cent at 156.3 pence.


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