It’s not so much a tale of two cities as a tale of one city
and the rest of the UK. Stock Exchange releases today from two very different
housebuilders continue to show strong trading in both cases, but in very
different ways.
Bellway, a volume housebuilder somewhat erroneously
associated with the North recorded an 8% increase in volumes, a 3% rise in
prices and a whopping 34% in pre-tax profits for the year to July. This
reflected a broad-based recovery across most of the company’s regions, and was
heavily assisted by the new homes- only first phase of the government’s Help to
Buy.
AIM-listed Telford Homes, which overwhelmingly trades in and
around London, said in a trading update for its first half year to September
that full year results, to March, would be “significantly ahead of market
expectations”. This was thanks largely to “substantially improved margins” and
without recourse to any Help to Buy funding.
Newcastle-HQ’s Bellway said it would target 15% more housing
completions in the current financial year. Telford offered a bolder, but less
specific, strategy “to considerably increase output over the next few years”.
Where the two companies diverge considerably appears to be in
who buys its homes. Bellway concentrates on traditional family housing, largely
for “real” buyers and saw prices rise by 8% in the northern half of its
operations largely as a result of selling bigger units rather than underlying
price inflation. (Its southern operations saw more modest growth in volumes and
prices, probably because of more demanding year-on-year comparables.)
More apartment-heavy Telford’s statement would have greatly
heartened London Mayor Boris Johnson on his mission to woo Chinese investment in
the capital. Two-thirds of reservations for one of its latest launches, near
Canary Wharf, had come from foreign investors and, for the first time, many of
these were from Chinese. (The lowering of trade and visa barriers, in the wake
of Boris’s – and, oh yes, George Osborne’s – trip to Beijing, one assumes, will
only further encourage this trend.)
Significantly, these sales are for completion around spring
of 2017. Indeed, across its sites, Telford is seeing “exceptional demand from
both owner-occupiers and UK investors even though the developments are being
marketed a year or more ahead of completion”. “Off-plan” is back with a vengeance.
What emerges from these two accounts is a picture in London
of speculative froth much dependent on the whims of global speculators and,
everywhere else, a plodding recovery that is largely reliant on government
support, low interest rates and banks’ recently improved risk appetite.
Bellway link Telford link
Bellway link Telford link
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