Grainger forecasts sales rise

Oct 6 2007 by Iain Laing, The Journal

BRITAIN’S largest listed residential property owner Grainger has said increased sales volume and improved margins would support a growth in full-year trading profit.

But the Newcastle-based giant echoed housebuilders and banks in warning of a slowing housing market due to the recent credit crunch.

“Recent changes in the availability of credit and cumulative increases in interest rates will inevitably affect the mortgage market and there is general acceptance that the overall rate of growth in the UK housing market will slow in the coming months,” it said in a statement.

September data showed British house prices unexpectedly fell for the first time this year as rising interest rates and a global lending squeeze weighed on market sentiment, according to HBOS plc’s Halifax house price survey on Thursday.

Nonetheless, the annual three-month rate of house price inflation remains in double digits at 10.7%, although it has slowed from the previous month’s 11.4%. Grainger said total sales were expected to be about £128m for the 12 months to September 30, up from £126m a year ago.

The group, which made acquisitions worth £151m in the last financial year, said its development division had also performed in line with expectations.

Shares in Grainger, which have already fallen by around a third this year, fell again yesterday by around 1.5% to 457p, valuing the firm at around £590m.

It said that during the second half of the year, it completed or exchanged contracts for the purchase of approximately £110m of tenanted residential properties in the core portfolio, bringing the total value of acquisitions made in the year to approximately £252m. It made sales of around £18m, compared with £26m last year and £18m in 2005.

The company will release full-year results on November 29.