Bovis is buoyant but warns over ‘bubble’

A new price bubble could be fuelled by Government initiatives to prop up the housing market, the boss of Bovis Homes said today.

Chief executive David Ritchie said the current “unhealthy equilibrium” in property — a mortgage-market squeeze matched by fewer homes being built, keeping prices stable — could potentially be shaken by schemes like the Bank of England’s Funding for Lending scheme.

“If overnight we saw a mortgage market with improved liquidity... it’s not rocket science to work out that there would be an increase in prices across the market,” Ritchie said. Bovis flagged up pre-tax profits ahead of City expectations of between £51 million £52 million. The surge is a result of better margins on land bought cheaply since the credit crunch, a 15% rise in completions and 5% rise in average selling prices to £170,000.

Bovis has also spent the lion’s share of its money on sites in more buoyant Southern markets, which now account for 75% of its business. Sales for 2013 also look healthy with reservations 37% higher than a year ago.

Panmure Gordon analyst Mark Hughes said: “Bovis is having its moment in the sun. This is an excellent trading statement with good growth in sales, prices and margins.”