British housebuilder hails UK interest rate stability

Bovis Homes today said the Bank of England’s decision to leave the cost of borrowing on hold since last summer had helped boost trading this year.

The Kent-based housebuilder said five interest rate rises up to last August led consumers to delay decisions on significant purchases – but the stability of rates since then had boosted consumer confidence.

It came as the group posted an 18% hike in pre-tax profits to a record £145.2m (€207.7m) in the year to December 31, in line with forecasts. Bovis also announced plans to move into two new parts of the country.

Chief executive Malcolm Harris said: “The stability of base rates since August 2004 has assisted consumer confidence and visitor numbers and reservations in early 2005 have been encouraging.”

Further confidence should come from the fact that average earnings had risen ahead of inflation, Bovis said.

It came despite downbeat signals for the housing market last week, when upmarket estate agency Chesterton went into receivership and estate agency Countrywide revealed a 42% fall in annual profits.

Bovis said it planned to move into two new regions – Wellingborough in Northamptonshire and Bristol – from July, subject to market conditions.

This was part of a strategy to grow the business through increasing its geographic coverage, since the state of the housing market meant further price increases may be more difficult to achieve.

Its “anchor” site in Bristol will be Filton, where the group has control of around 2,200 plots of land allocated for residential development, while it has some 3,000 plots in Wellingborough.

Bovis is focused on the South East, South West and the Midlands, serving the lower-middle market and retirement sector and providing homes with an average price of around £190,600 (€272,757).

It recently pledged to ramp up the supply of affordable housing in a bid to counter the slowdown in the property market.

Shares rose 2%, up 16p to 711.5p today.