Orders up, reservations up and debt down all sound like pretty good news for Britain’s biggest housebuilders so why does it not quite feel like it?
Interim management statements from Barratt today, Persimmon yesterday and Taylor Wimpey two weeks ago all contain plenty of green shoots. Taylor Wimpey said it had already sold its stock of homes for 2009, Persimmon could boast the same plus forward orders up 50% on a year ago and Barratt said net private reservations per site were running 34% ahead of a year ago.
Following a rights issue, Barratt’s debt is half what it was this time last year at £700m, Taylor Wimpey’s net debt is £860m against £1.87bn and Persimmon owes £399m rather than £960m. The companies are even starting to buy land again.
All of which is an impressive recovery compared to the doom and gloom of last year, partly thanks to government support through HomeBuy Direct (Persimmon has just seen its 1,000th house reserved through the scheme since March). However, the focus in all three companies still seems to be on continuing to dig themselves out of a hole by achieving sales prices increases and controlling costs.
‘Sustaining the current recovery will be dependent on improvements in mortgage availability and the wider economy,’ says Taylor Wimpey. ‘We remain concerned about the potential impact on our markets of any significant increase in unemployment over the coming months,’ says Persimmon.
The same caution is evident in Barratt’s statement today. The company is operating from 20% fewer active sites than a year ago and warns: ‘Whilst there has been an improvement in market conditions, further recovery will be dependent on increases in mortgage lending particularly in the higher loan to value segment.’
Given that the Council of Mortgage Lenders (CML) said last week that ‘to all intents and purposes the UK mortgage book is stagnating at present’ the prospects of that do not look great.
The unspoken fear for housebuilders is a double dip in the housing market.
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