Housing market may be emerging from slump

Oct 7 2009 by Karen Dent, The Journal

FURTHER signs the housing market may be emerging from the slump have been revealed by residential landlord Grainger plc, which is forecasting a sales increase of around 20%.

The Newcastle company, which also said yesterday that chief executive Rupert Dickinson is stepping down due to ill health, forecast its sales will rise by 21.6% to around £220m for the year to September 30, from £181m in 2008.

However, Britain’s biggest landlord, which owns around 14,000 properties ranging from former pitmen’s houses to upmarket London streets and homes in Germany, Estonia and the Czech Republic, said margins were lower and trading profits would be down on last year.

It blamed falling house prices and increased sales of properties to tenants. But the company appears confident the market is improving.

Finance director Andrew Cunningham, who will take over as chief executive later this month, said: “Sales of assets were 20% more than last year. In this market, that has got to be quite an achievement and there has only been a 4% fall in the value of the portfolio.

“Over the last 12 months, we’ve cut back and focused on selling assets.”

Grainger, which last week agreed new terms with its bankers for credit facilities totalling £615m as it repays loans of more than £900m, reduced its spending on new properties to £12m from £146m last year. Sales from the development division were also up from £10m last year to around £47m this year.

John Dickinson, research director at Brewin Dolphin Investment Banking in Newcastle, said: “It is encouraging that Grainger has managed to sell as much housing as they have in what is obviously a difficult market.

“The company has done a lot to grow shareholders’ confidence over its potential debt repayments.”