Falling house sales signal a slowing market

Jan 12 2008 by Iain Laing, The Journal

HOMEBUILDER Bovis Homes has said it sold 6% fewer homes last year in a further sign that the housing market is slowing.

The builder said the number of houses sold during 2007 dropped to 2,930 from 3,123 the year before. The average sales price also fell to £179,400 from £183,700.

Bovis said prices for its homes sold in the private sector went up by 4%, but an increase in the proportion of social housing produced dragged down average sales figures.

The firm also signalled more uncertainty for the housing market ahead, saying its outlook for this year was “unclear”.

Bovis said: “Looking ahead, a number of external market metrics suggest that activity in the UK housing market has slowed, both in terms of the lower rate of house price growth and in terms of the reduced number of new mortgages being issued. Given the rapid rate of emergence of these trends and an expectation that interest rate cuts will continue, the outlook for 2008 is not clear at present.”

There has been mixed data on the housing market so far this year, with mortgage lender Halifax saying that prices rose by 1.3% during December, wiping out some of the falls seen during the previous three months.

But the Council of Mortgage Lenders said the value of mortgages taken out by people moving home fell to a seven-month low of £12.2bn in November.

Bovis said it had concentrated on maintaining profit margins during 2007 and expected pre-tax profits for the year to be in line with market forecasts.

In November, Numis Securities cut its forecast for the firm’s 2007 pre-tax profits from £140m to £122m. Bovis reported pre-tax profits of £132m in 2006.