Housing market fundamentals remain supportive despite greater market uncertainty, the housebuilder said in a trading update.
“Another year of both growth in volume and increase in average sales price is expected to deliver record revenues for the Group in 2016,” said David Ritchie, Chief Executive of Bovis homes. “As a result, we are on track to deliver increased profit and a further improvement in return on capital employed, in line with our expectations.”
The backdrop for housebuilding in the UK continues to be positive with demand for new homes running ahead of housing supply, the statement said. “Political support remains in place as evidenced by the improved planning regime and the continuation of the Help to Buy equity loan scheme,” it said. “At the same time unemployment continues to be low and the mortgage market remains competitive.”
Bovis has reservations in place to achieve over 5% growth in legal completion volume in the year and sales prices remain robust. The average sales price for 2016 is expected to be around 10% ahead of last year, driven by improving mix and increased underlying market pricing.
However, the housebuilder warned of a shrinking workforce and rising costs. “We continue to drive build activity on all sites and production to date is running some 5% ahead of the prior year,” the statement said. “The availability of labour remains a constraint on activity across the sector and whilst our sub-contract cost inflation rate has moderated since the second half of 2015, we continue to see market cost increases.”