Bovis sees house prices drop 10%
Heather Long
Friday July 15, 2005
The Guardian
Bovis Homes has become the latest builder to feel the effects of the sluggish housing market after reporting a 16% drop in sales and a 10% drop in prices in the first half of 2005.
The company, which specialises in suburban housing, said it was unlikely to meet its target of 1,100 more reservations before the end of the year. Its four and five-bedroom houses were taking 20 weeks to sell this year, compared with eight weeks last year. The average price of the 1,089 houses it sold in the first half was down 10%, to £179,800.
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"There has been no discernable improvement in transaction activity in the housing market since the election," said chief executive Malcolm Harris.
Ed Stansfield, at Capital Economics, said: "It's no secret that the housing market over the last year has been weak with ample evidence that prices are falling."
Annual house price growth is now below 5% on most measures, the lowest in about 10 years and down from 25% two years ago. London and the south-east have been especially hard hit with stagnant or even falling prices.
People have been hesitant to purchase bigger new homes since a record low in first-time buyer numbers means the market lacks its traditional foundation. "First-time buyers are reluctant to enter the market or take out large mortgages and that trickles up the housing chain causing less demand at all levels," said Mr Stansfield.
Analysts predict the Bank of England will probably cut interest rates next month. However, Milan Khatri, of the Royal Institution of Chartered Surveyors, said: "One interest rate cut will not turn it around." He also cited signs of softening in the labour market and lower consumer confidence as factors affecting the housing market.
Shortages remain in government-backed housing for first-time buyers and health workers, said Bovis. It plans to expand production of cheaper apartments to cater for social housing demand and boost second half-earnings.
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Heather Long
Friday July 15, 2005
The Guardian
Bovis Homes has become the latest builder to feel the effects of the sluggish housing market after reporting a 16% drop in sales and a 10% drop in prices in the first half of 2005.
The company, which specialises in suburban housing, said it was unlikely to meet its target of 1,100 more reservations before the end of the year. Its four and five-bedroom houses were taking 20 weeks to sell this year, compared with eight weeks last year. The average price of the 1,089 houses it sold in the first half was down 10%, to £179,800.
Article continues
"There has been no discernable improvement in transaction activity in the housing market since the election," said chief executive Malcolm Harris.
Ed Stansfield, at Capital Economics, said: "It's no secret that the housing market over the last year has been weak with ample evidence that prices are falling."
Annual house price growth is now below 5% on most measures, the lowest in about 10 years and down from 25% two years ago. London and the south-east have been especially hard hit with stagnant or even falling prices.
People have been hesitant to purchase bigger new homes since a record low in first-time buyer numbers means the market lacks its traditional foundation. "First-time buyers are reluctant to enter the market or take out large mortgages and that trickles up the housing chain causing less demand at all levels," said Mr Stansfield.
Analysts predict the Bank of England will probably cut interest rates next month. However, Milan Khatri, of the Royal Institution of Chartered Surveyors, said: "One interest rate cut will not turn it around." He also cited signs of softening in the labour market and lower consumer confidence as factors affecting the housing market.
Shortages remain in government-backed housing for first-time buyers and health workers, said Bovis. It plans to expand production of cheaper apartments to cater for social housing demand and boost second half-earnings.
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