Major housebuilders expected to see double-digit profits in 2012

Housebuilders’ profit margins are expected to return to double digits next year, analysts said last week, providing hopes of improved trading for domestic service suppliers.

Numis Securities analyst Chris Millington said margins are set to climb from 5-10 per cent to 20-25 per cent, figures not seen since the downturn.

Persimmon and Bovis Homes have both stressed a focus on margins in their trading updates to the Stock Exchange for the first six months of 2011.

Mike Farley, chief executive of Persimmon, the biggest housebuilder by volume, anticipates the underlying operating margin for H1 2011 will hit 9 per cent, up from 8 per cent the year before.

Barratt has also reported a return to profit thanks to its London and South-east market, it said last week.

In a trading update for the year ended 30 June, the company said it expects to deliver a profit before tax and exceptional items of £40 million, compared with a loss of £33m in 2010.

Although after the costs of a four-year £1 billion refinancing are taken into account, the company is expected to make a small loss, its chief executive Mark Clare confirmed.

Meanwhile, Bovis chief executive David Ritchie said he is also confident of delivering an operating margin of at least 7 per cent for the same period, compared with 4.2 per cent for 2010.

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‘Average price of a new home hits 31-month high’

The average price of a new home rose by 3.8% in May to £228,041, the highest level since October 2008, according to new homes website SmartNewHomes.

Strong positive growth was also recorded on a three month and annual basis, up 4% and 3.4% respectively.

Commenting on the data, Steve Lees, Director of SmartNewHomes, said: “The significant rise in the average price of a new home is indicative of growing consumer demand during the peak buying season. There are significant numbers of potential buyers who are looking for new homes and who are keen to buy while they can still find excellent value for money.

“The affordability of homes for first-time buyers remains a problem, though the industry is hopeful that the new ‘FirstBuy’ scheme will boost the new homes market when funding starts to be released this Summer.”

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House prices fall for the eighth consecutive month

Experts predict prices will continue to fall as fewer people are getting loans and many are falling behind repayments

The average price of a UK home fell by 1.4% in January to £208,552 according to the Department for Communities and Local Government (DCLG).

The annual rate of house price inflation dipped to 0.5% in January, compared to 3.8% in December and a peak of 10.6% in May 2010, according to the DCLG house price index. It was the eighth consecutive month during which the annual rate of house price inflation has fallen.

Negative housing market data was also announced by the Financial Services Authority (FSA), which showed new loans to borrowers reached £37bn in the fourth quarter of 2010 – a drop of 10% compared to the previous quarter and an 11% fall compared to the final quarter of 2009.

The FSA said the number of new arrears cases increased in the final three months of last year to 38,800 – 6% higher than the previous quarter but still 5% below the 40,900 cases in the fourth quarter of 2009 . The total number of accounts in arrears at the end of 2010 was 343,400, unchanged from last quarter.

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House prices fall 2.8% year-on-year

Halifax house prices index shows decreases in yearly, quarterly and monthly measures giving an average house price of £162,657

House prices fell by 2.8% over the the year to February, according to the Halifax – the biggest annual fall since October 2009.

The bank reported a monthly change of -0.9% in house prices and a quarterly change – lenders’ preferred measure – of -0.4%, leaving the average house price at £162,657.

But Martin Ellis, housing economist for the Halifax, downplayed the falls saying there had been little change in house prices over the first two months of 2011, with this month’s 0.9% fall offset by January’s 0.8% gain.

“Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year,” he said.

“Fewer properties have been coming on to the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.”

The ratio of average house price to national average earnings for a male working on a full-time basis is also at its lowest point for a year, standing at 4.46 compare to 4.63 in February 2010.

Earlier this week, Robert Gardner, chief economist for Nationwide building society, said the low number of first-time buyers was “casting a shadow” over the housing market.

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