Warning on slow housing recovery

Further evidence that the revival in the housing market has yet to filter through to the building industry came yesterday as three big groups warned of sluggish trading so far this year.

George Wimpey, the UK's biggest housebuilder, revealed that it had slumped into the red in the first half and said house price rises were still patchy.

Elsewhere, hopes of a revival in the new housing and construction markets were dashed after Blue Circle, which produces half of Britain's cement output, predicted that volumes would be down around 4 per cent in 1996, and IMI, a leading maker of copper pipes and valves, said it expected the recovery in the new housing market to be delayed until next year.

Wimpey, which earlier this year swapped its mineral assets for Tarmac's McLean Homes housebuilding operation, displayed the worst scars from the sluggish markets.

Profits of pounds 1m were replaced by a loss of pounds 8.6m in the first half of the year. The original Wimpey Homes operation saw the number of homes completed slump from 3,512 to 2,718, with McLean chipping in 2,303 units, slightly up on the same period last year.

The group played down reports of a booming house market, saying some sectors were more active than others, particularly more up-market homes and areas around London. However, although Joe Dwyer, chairman and chief executive, expects sales to be down for the year, he remains optimistic that the worst is now over. "There are, for the first time in many years, real signs of sustained improvement in the UK housing market,'' he said.

That was not a message which found much resonance at Blue Circle, which reported an 8 per cent fall in cement volumes in the first half. Ian McKenzie, chief executive of the UK cement business, said that the expected outcome for the year was very disappointing in view of expectations six months ago of a good recovery this year.

He also launched an attack on Government's "abysmally low" level of spending on roads and transport. If spending continued at this rate, it would damage the competitiveness of UK industry, he said. It was not good enough to expect the Government's private finance initiative to bail the country out.

Investment column, page 18

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