Housing Market Update (PSN & BVS)

Thursday, 5th July 2018 12:47 - by Rajan Dhall

This morning we have seen a trading update from both Persimmon and Bovis Homes. 

Persimmon: 

• Total revenues for the first six months of 2018 were £1.84bn, 5% higher
• Housing revenues for the first six months of £1.74bn were 5% higher
• The Group's new housing average selling price increased by 1.2% to c. £215,800 (2017: £213,262).
• The value of the Group's total forward sales of new housing at 30 June 2018 of £1.68bn was 5% higher than last year

Bovis Homes: 

• The Group delivered a total of 1,580 (2017: 1,512) completions in the half year, slightly ahead of our expectations and an increase of 4% on the prior year
• Our private average selling price in the period was c. £335,000 (2017: £334,700), with underlying prices remaining firm
• Our total average selling price was c. £261,000 (2017: £277,400)
• The Group's sales rate for the half was up 8% to 0.52 (2017: 0.48) net private reservations per site per week.

We must remember that Bovis is the smaller of the two developers but the results are pleasing in both camps. The sector has taken a battering recently as the average price in the UK fell somewhat and as the UK gov. clamp down on land banking to try and get more homes made. Bovis commented on their outlook saying 'The housing market fundamentals remain robust, with good demand for new homes across all our regions and underlying pricing remaining firm.'. Other companies in the sector have complained of higher margins hitting profits and Persimmon seem to think they have this handled stating 'Despite inflationary cost pressures, disciplined cost control and continued efficiency savings have supported this margin progression'.

Looking at the chart you can see the price action is very similar. Since 2017 there has been a slight acceleration of speed in the Persimmon share price. This morning on the back of these results its possible the share price will rise, but unless sentiment overall improves in the sector I expect some sideways action for some time. 

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.