Bovis Homes Joins UK Property Developers in Reporting Market Upswing

In a fresh sign of recovery in Britain’s construction industry, Bovis Homes Group Plc (LON:BVS) has reported strong performance, thus joining a string of firms in the sector to have seen results improve since the beginning of the year thanks to government initiatives to help buyers.

The UK homebuilder said in a trading update on Thursday, May 16 that sales rates and prices had beaten management’s expectations since the beginning of 2013.
Bovis’ Interim Management Statement covering the period from January 1 to May 16 echoed peers’ reports of steady trading in improved market environment, suggesting the government’s “Help to Buy” initiative has been exerting influence.

“Experience with Help to Buy in its early weeks has been encouraging with strong interest from home buyers and an increase in visitor numbers to the group’s sales outlets,” Bovis said.

The company received 989 private net reservations in the 19 weeks to 10 May, 26 percent higher than the same period last year, helped also by a rise in the number of its sales outlets.

Visitors to Bovis’ sales outlets increased by 29 percent and sales prices achieved on reservations modestly exceeded the company’s expectations. The company anticipates half-year sales prices to be materially ahead of the prior year due to improved mix.

Bovis’ Chief Executive Officer David Ritchie said in a statement on Thursday: “Homebuyer sentiment has been improving and, with the recently announced Government initiatives, sales rates have increased ahead of management’s expectations.”

He added that the increased number of active sales outlets would provide “a great opportunity” to tap into the improving market conditions and further strengthen shareholder returns.

Looking ahead, Bovis said that it viewed its prospects for 2013 “with increased confidence”. Based on current market conditions continuing, the homebuilder expects increased legal completions at a higher average sales price and at an improved gross profit margin, combined with enhanced overhead efficiency.

Thus, Bovis would continue to improve the return on capital to a level approaching 10 percent for 2013 as against 7.7 percent in 2012, the homebuilder said in the trading update.

The Bovis share price jumped after the release of the group’s Interim Management Statement with the upbeat trading update lifting the homebuilder’s stock by more than five percent to 775.50p in early trading in London on Thursday.

The rise was reversed later in the day and as of 13.21 GMT the share price stood at 765.50p, still 1.66 percent up on its previous day’s closing level.