Housing recovery stalled, says Tay

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The Independent Online
(First Edition)

SEPTEMBER'S interest rate rise has stalled the recovery in new house sales, according to Trevor Spencer, chairman of Leeds-based Tay Homes, writes Alison Eadie.

He said he had hoped sales would take off this autumn after May and June showed a 25per cent increase, but activity had slowed to the depressed levels of the previous two autumns.

'The market is very delicately balanced. Perhaps a new seasonal pattern is emerging with a strong spring and weaker autumn. There is a feeling that interest rates, mortgage rates and house prices against salaries are at sensible levels.'

He added it was too early to tell what effect the rate increase had had on land prices, which were rising fast until the beginning of September.

Tay Homes doubled pre-tax profits to pounds 6.2m in the year to the end of June on turnover 22 per cent ahead. It sold a record 1,308 homes compared with 1,107 the previous year.

The total dividend is being raised by 10.3 per cent to 6.45p.

The average selling price rose to pounds 64,700 from pounds 61,000, due to a change of size and mix of houses not to a rise in house prices, Mr Spencer said.

The company has enough land to last this year and well into next year. It spent the pounds 10.2m raised in last November's rights issue on land, giving a balance sheet land value of pounds 39m.

The share price rose 12p to 163p.