Housebuilders' profits soar, but slowdown looms

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The Independent Online

Two of Britain's biggest housebuilders yesterday said that the heady increases seen recently in house prices are over, as they reported sharply increased first-half profits on the back of the recent property boom.

Two of Britain's biggest housebuilders yesterday said that the heady increases seen recently in house prices are over, as they reported sharply increased first-half profits on the back of the recent property boom.

George Wimpey, the country's biggest housebuilder, and Taylor Woodrow, a housing, property and construction group, both pointed to a dramatic slowdown in the buoyant South-east, excluding London.

Dennis Brant, chief executive of Wimpey, said that prices had slipped by about 1 per cent in the South-east over the last four months - compared with 20 per cent increases last year. He said the rest of the country was flat, in price terms, during the period.

"Since April, we have seen the froth coming off the market, and a soft landing," said Mr Brant. He forecast annual price increases of 4 or 5 per cent across the country. The company saw average selling prices rise 20 per cent to £109,000 for the six months to 30 June, and reported pre-tax profits up 72 per cent at £48m.

Taylor Woodrow, which said its average selling price was 22 per cent higher for the period at £132,000, said the London market was holding up well although there had been a slowdown in the pace of increases. The company's homes in London sell for more than £500,000.

Keith Egerton, chief executive of Taylor Woodrow, said: "The 20 per cent increase we saw last year in the South-east was clearly not sustainable. It is likely to grow 6 or 7 per cent [a year] now." He said house prices were cushioned against falling prices by the supply constraints produced by a very slow planning process.

Mr Egerton said the North of England continued to see price rises running at 5 per cent a year, Scotland by 0 to 5 per cent, and the West of England 10 per cent. The company saw pre-tax profits jump from £49.7m to £89.4m, for the six months to 30 June.

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