Bovis Homes said sales climbed 19 per cent last year as the British homebuilder sold larger properties on more valuable sites in southern England.
Sales rose to 2,813 homes and the average price gained 14 per cent to £195,100, the Longfield company said yesterday in a statement. Its operating profit margin is nearing 15 per cent, according to the statement.
British prime minister David Cameron is using homebuilding to help stimulate the economy, with the British government in March announcing it would offer an equity loan of as much as 20 per cent of the value of a newly built home valued at £600,000 or less.
A British house-price index by the Royal Institution of Chartered Surveyors was close to the highest in more than a decade last month, led by London and the southeast. The measure was at 56 after a reading of 58 in November, the London-based group said yesterday, citing a survey of property surveyors.
Bank of England governor Mark Carney said earlier this week that he expected a further strengthening of the property market this year.
Bovis’s strategy has been to “invest in a lot of land in the south of England, moving the business back to its heartland of traditional detached housing in the south and, as a consequence, the average price point has increased”, chief executive David Ritchie said. “That’s going to continue because we’ve continued to invest in that way.”
British homebuilders have widened profit margins by obtaining development land after prices dropped during the financial crisis. They have also increased margins by shifting their focus to single-family homes from apartments.
Bovis bought 3,737 plots of land in 2013 and says it now has enough land for five years of construction at current levels.
Bovis is likely to announce a “significant increase” in pretax profit for 2013 when it releases full-year earnings on February 24th. – (Bloomberg)
