Wednesday, 27 November 2013

Telford's big call on London

London housebuilder Telford Homes’ half year results this morning were nothing if not bullish. And probably not without reason. Even though unit sales completions were down a bit (225 versus 256 a year earlier), prices, margins and profits were all up. But most notable was the gusto of the outlook statement: “The board is very confident of the prospects and growth potential for Telford Homes over the next few years”.

Big call. A few years is a long time in housing, Harold Wilson might have said. Even the most ebullient of housebuilders would define their horizons in terms of “the foreseeable future” and the like. To support this view Telford, which focuses on the eastern and northern fringes of inner London, points to its forward sales position: all of its budgeted sales for the year to March are in the bag, as it were, and it is 80% and 60% for 2015 and 2016 respectively. In Building magazine’s website chief executive Jon Di-Stefano said he plans to double the size of the company within five years.
Rather churlishly, the shares were off almost 2%, while most housing stocks were up by a percent or so. They had, however, hit a multi-year high yesterday, based on the current strength of the London market. Doubtless there is the old City adage about travelling and arriving. But maybe there was a note of concern about the pace of land buying, which the statement said was ahead of its forecasts, having raised £20m in an equity raise in June.

Reports that the London land market is getting not just over-heated but super-heated are coming in from all directions and having millions burning a hole in one’s corporate pocket at such a time is not necessarily a good thing.

Trying to call the top of the London market is a dangerous business (I’ve got the scars to prove it). But equally rash is assuming the boom times, to paraphrase another deceased Prime Minister, will “go on and on”.

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