Business

Bovis profits rise sharply on 'modest' house price growth

A builder working on a new house Image copyright PA
Image caption Bovis said it believes it will property sale completions will rise in the next few years

House builder Bovis Homes has reported a 150% rise in pre-tax profits to £49.4m in the six months to the end of June compared with £18.6m a year earlier.

It said house sales had benefitted from a "modest" improvement in house prices.

Bovis reported a sharp rise in both the number and value of the properties sold.

It completed 1,487 property sales in the first half of the year, 54% higher than the same period a year earlier.

Bovis, which builds the majority of its properties in Southern England, added it expected to complete 3,530 property sales this year, an increase of just over 1,000 sales compared with 2013.

The property developer also gave a robust forecast for the years ahead, saying it expected to see new property sales increase to between 5,000 and 6,000 annually.

The average price paid for a new build property was 20% higher at £239,500 compared with £200,200 a year earlier, it added.

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Media captionBovis Homes' David Ritchie outlines the company's half yearly results

Bovis said the UK housing market had "continued to perform robustly" in 2014, with increased housing transaction activity, increased access to mortgages and growing consumer confidence as a result of the economic recovery.

Bovis's share price closed up 4.5% on the London Stock Exchange at 837.50p.

Housing boom

Earlier in August, a survey showed UK housebuilding grew at its fastest rate in nearly 11 years in July.

The Markit UK Construction PMI report said home building grew at its steepest rate since November 2003, driven by strong demand for new projects.

And the latest Halifax house price index for July showed property values nationally increased by 10% for the first time since September 2007.

However, mortgage lending has seen a dip since the introduction of new affordability rules in April and the additional rules announced by the Bank of England have led some to warn of a slowdown in the property market.

But David Ritchie, chief executive of Bovis Homes, told the BBC the house builder's experience was that there had been a 5-6% increase in house prices outside of London in the last year.

He added it was "quite early to suggest that that might be the end of the pricing improvements in this market".

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