Housebuilders Taylor Wimpey, Redrow and Bovis Homes said that trading remained steady despite challenging conditions, with mortgage lending constraints still having an adverse impact, although lending is gradually improving due in part to the government-backed Funding for Lending Scheme.
While access to mortgages remain restricted, Redrow told the City that the introduction of initiatives such as NewBuy had helped to stimulate demand for new homes.
The government-backed NewBuy scheme, launched earlier this year, has already attracted over 2,000 reservations. The initiative allows participating lenders to supply up to 95 per cent loan-to-value mortgages for homebuyers purchasing a brand new home.
Speaking at a recent property industry event, Steve Morgan, executive chairman at Redrow said, “I applaud the government for the New Buy scheme – it is exactly the kind of mortgage indemnity guarantee (MIG) … the government should also introduce a similar MIG scheme for the second hand market, especially for first time buyers. When a first time buyer purchases a second hand home, it then frees up someone in the chain to buy a new home.”
Redrow said its ongoing investment in land had meant that its net debt increased from £14 million in June to £90 million, but said its balance sheet remained healthy. The developer said in September that full-year profit more than doubled, as it sold more expensive properties.
However, Redrow missed out on making any real gains, referring to the market as “challenging but stable”, after major shareholders rejected Morgan’s attempt to buy the developer, which he founded in 1974, back on the cheap.
Taylor Wimpey also commended government initiatives, such as the NewBuy and FirstBuy schemes, for helping to boost the number of people looking to acquire a new home. “Maximising the value achieved from each home completion remains our top priority and we are now fully sold for our targeted 2012 completions and are building our order book for 2013 completions,” said Taylor Wimpey.
Bovis Homes said that it expected to meet full-year guidance for the number of new homes sold. High demand from homebuyers helped to push its average sale price up from £180,100 a year ago to £190,000, with prices in the southeast generally stronger. The company said that the rise in the price of homes sold helped to boost its revenue this year and now expects its operating margin for 2012 to be around 13 per cent, up from 10 per cent in 2011.
David Sansome, Managing Director at Sansome & George said: “The NewBuy scheme is clearly helping developers sell new homes but, whilst welcome, in the grand scheme of things is only affecting a tiny proportion of the overall marketplace.”
