The larger listed house builders have reported accelerated demand for their new homes, with sales, reservations and profit considerably higher so far this year. First half forward reservations are up an average 36% on the same period last year with average revenues and profits are up 13% and 40% respectively.
Help to Buy has without doubt significantly contributed to the increase in reservations since it was introduced in April, with around 12,500 homes reserved as a result of the scheme, accounting for around a quarter of each house builder’s sales so far this year.
Barratt CEO Mark Clare said recently: “We have had people coming at 4am for a 9am start and have many examples where our sales teams have arrived to find a dozen or so people waiting. We are starting to see queues, which is not something we have seen for years. And we are also seeing people buying off plan, which we have not seen for five or six years.”
House builder Reservations Revenue Profit Homes built House price rise
Barratt 53% 12% 74% 6% 13,663 6% to £213,000
Bellway 27% 12% 25% 8% 5,652 3% to £193,000
Bovis 43% 17% 19% 2% 963 15% to £188,500
Taylor Wimpey 35% 12% 42% 2% 5,191 7% to £188,000
Persimmon 21% 12% 40% 7% 5,022 7% to £179,199
Just one house builder reported their customer satisfaction levels. Taylor Wimpey reported a fall of over 5% to 88% (93.2% 2012 full year) which would mean that Taylor Wimpey loses their 5 star status if satisfaction scores do not improve in the second half.
Reported average selling prices have increased 7% to 8% which may be reflected in the fact that builders are now building larger, more profitable homes they can now sell with the taxpayer picking up 20% of the purchase prices rather than lower-priced apartments. The house builders claim that house price inflation was around 1% to 2%, which is at odds with the percentage increase in their average selling prices.
There has been a modest 5% average increase in the number of new homes house builders are building. However Barratt confirmed they had increased production by 20% during the last two years and announced plans to build 45,000 new homes across the next three years.
Leading house builders met with the housing minister Mark Prisk last week to inform him that the taxpayer-funded ‘Help to Buy’ scheme has to date, been an “unqualified success”. Despite this, they used last week’s meeting as an opportunity to push for even further help. Persimmon, Barratt and Taylor Wimpey chiefs discussed what could be done to relax their perceived constraints on housing supply, those old chestnuts – the planning system and regulatory costs.
The government should give serious consideration to a ‘Windfall Tax’ levied on the excessive profits the house builders are making on the back of “Help to Buy” before conceding any further relaxation of rules and additional measures to the industry.