Property boom lifts builders and retailers
Thursday 31 July 2014
The UK’s rapidly recovering construction and property market paid dividends for a clutch of UK companies yesterday as housebuilder Taylor Wimpey, property website Rightmove and builders’ merchant Travis Perkins delivered strong first-half figures.
Taylor Wimpey is speeding up its cash return plans to shareholders to £250m next year, £50m more than expected, on the back of an improving market which has seen a recovery in house prices outside the London and South-east hot-spots.
House prices rose nearly 12 per cent in the year to June according to building society Nationwide and mortgage lending picked up again in June despite measures to cool lending and the Financial Conduct Authority’s mortgage market review, which imposed tougher criteria on would-be borrowers. Taylor Wimpey managed a 64 per cent jump in pre-tax profits to £178.4m in the first half and the extension of the Government’s Help to Buy scheme until 2020 also is underpinning prospects.
“Confidence remains good amongst customers,” chief executive Pete Redfern said.
Gavin Jago, an analyst at Peel Hunt, said: “With Taylor Wimpey also reporting that cancellation rates remain very low, there is growing evidence that the mortgage market review has not dented mortgage supply, merely temporarily slowed processing times, and this should provide comfort to investors.”
This demand was also reflected in results from Rightmove, as profits leapt 32 per cent to £58.8m. The website kept its position as one of the UK’s top 10 most-viewed. Britons are increasingly turning to their mobiles to hunt for homes, with mobile traffic growth up 45 per cent on a year ago to 3.2 billion pages and nearly 7 million downloads of its app.
Travis, the £4bn FTSE 100 company behind brands including Tile Giant, BSS and the Wickes DIY chain, joined the party with a double-digit rise in sales to £2.73bn. It was fuelled by a recovery in housebuilding and maintenance activity as well as a milder winter, lifting profits 19 per cent to £162.5m.
Sales grew more than twice as fast at Travis’s Wickes, as the chain was still reliant on price-cutting to shift kitchens and bathrooms. The chief financial officer Tony Buffin said: “Consumers are still circumspect about making big-ticket purchases.”
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