Housing: Bovis warns over boost for lending

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The Independent Online

A new price bubble could be fuelled by government initiatives to prop up the housing market, the chief executive of Bovis Homes warned today.

David Ritchie said the current "unhealthy equilibrium" in property – a mortgage-market squeeze matched by fewer homes being built, keeping prices stable – could be shaken by initiatives like the Bank of England's Funding for Lending Scheme.

"If overnight we saw a mortgage market with improved liquidity … it's not rocket science to work out that there would be an increase in prices across the market," Mr Ritchie said.

Bovis flagged up pre-tax profits ahead of City expectations of between £51m and £52m. The surge is a result of better margins on land bought cheaply since the credit crunch, a 15 per cent rise in completions and a 5 per cent increase in average selling prices to £170,000.