Britain’s house prices are continuing to increase every single year because there is a dearth of property available for the consistent rampant rise in demand.
Basically, there is a massive gap between supply and demand and property prices won’t stop rising until this gap closes.
Now, according to the latest trading statement by housebuilder Bovis Homes, prices are going rise again and in turn boost its sales and profits massively because all the new homes they are building are being snapped up quickly in advance.
This is what it said in its trading statement (emphasis ours):
We expect to announce a significant increase in revenue and profit before tax driven by a record number of legal completions and a strong increase in average sales price.
The Group delivered 3,934 homes which represents an increase of over 8% compared to the prior year (2014: 3,635). Average sales price increased by 7% to circa £231,000 (2014: £216,600).
With this result we will achieve our targeted improvement in capital turn to in excess of one times.
This combined with an anticipated increase in operating profit margin to over 17% should enable the Group to increase its return on capital employed to in excess of 18% for 2015 (2014: 16.2%).
Anthony Codling and his team at Jeffries said in an analyst note this morning (emphasis ours):
“Bovis is one of the few growth stocks in the UK-listed housebuilding sector; we estimate that volumes will grow by c.25% and PBT by around 65% in the three years ending 2017.
The group is focused on the higher growth housing markets in the south of the UK with limited exposure to the more volatile London market.”
Bovis Homes is the latest in a long line of British housebuilders that are making a killing out of the home shortage.
Earlier this week Taylor Wimpey told investors that it made a killing from the country’s housing shortage in 2015.
Taylor Wimpey reported its trading statement for the year ending December 31, 2015, which will be officially announced on March 1, 2016, and said that it has built more houses than since the onset of the credit crisis in 2007/2008 and as a result it made a big profit.
Average selling prices on private completions by Taylor Wimpey increased by 9% to £254,000. Total home completions increased by 7% to 13,341.