Land prices too high, says builder

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The Independent Online
LAND prices have been forced up to unsustainable levels by over-optimistic assumptions about house prices, according to Terry Roydon, managing director of Prowting, the house- builder, writes Tom Stevenson.

'The prices paid recently in the South of England are as high as in 1987 and 1988, but (house) selling prices are up to 30 per cent lower and unlikely to rise sharply,' he said.

Prowting's interim figures confirmed the uncertain nature of the housing recovery. Although reservations were 30 per cent higher, the average selling price of pounds 85,000 in the six months to August compared with pounds 88,000 last year.

That had led to lower margins, resulting in operating profits of pounds 1.5m ( pounds 2.5m) from sales of pounds 15.6m ( pounds 18.1m). After a lower interest charge, pre-tax profits jumped from pounds 120,000 to pounds 520,000.

After the acquisition of the rival builder Galliford in October, Prowting plans to build more than 900 houses a year.