Bovis Homes yesterday signalled its confidence in the housing market by announcing a major increase in its annual building programme.
The company, reporting a 17.5 per cent jump in pre-tax profits to £123m, revealed plans to push up volumes for the next few years.
For the year ended 31 December 2003, Bovis completed 2,364 homes. It said it aimed to lift volumes by at least 10 per cent this year and in 2005, and possibly even faster after that.
Malcolm Harris, the chief executive, said Bovis had been investing in large amounts of land over the past 10 years and it was suddenly finding planning consent coming though on a lot of this land. "It is a bit like buses," he said. "It comes through all together or not at all."
Bovis reported a jump in operating margin from 23.8 per cent to an industry-leading 27 per cent. It was able to improve margins so much because house prices had risen nearly twice as fast of costs.
"The idea now is to push extra volume through. To build the company much faster but in a sustainable way because of the size of our land bank," Mr Harris said. The number of homes under construction is already 55 per cent up this year. Sales reservations are 25 per cent ahead of March 2003.
Mr Harris said he was not worried by gloomy predictions from some commentators about a correction or even crash in the housing market.
"The fundamentals affecting the industry have not changed during the past year. Demand for new homes outstrips supply. Although house prices have increased and interest rates have risen, affordability remains good."
Bovis has more than 22,000 plots in its "strategic" land holdings, together with almost 11,000 that already have planning consent. Over the next three years, it aims to build on 9,000 more plots than would have occurred under previous growth rates.
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