The recovery in the housing market continues to be good news for house builders but not for house building, according to trading statements from the major companies.
Sharp reductions in debt and increases in forward sales and average selling prices were all features in the results for the six months to the end of December. Two of the biggest companies, Barratt and Taylor Wimpey, have cut their debt by a combined £1.5bn since December 2008. Forward sales were up 43% at Barratt, 28% at Taylor Wimpey and 40% at Persimmon.
But the emphasis is still firmly on controlling costs and improving margins rather than output. The increase in average selling prices is so far more the result of changes in the mix between flats and houses and between affordable and market homes than much underlying improvement.
And completion of new homes are still falling. Barratt completed 5,028 homes in the six months (27% less than in 2008). Taylor Wimpey completed 10,186 homes in 2009 as a whole, which was down 24% on 2008.
Given the extent to which house building depends on a few major companies, that does not bode well for the future and it makes the search for alternatives even more urgent.
Barratt chief executive Mark Clare said last week that he does not expect house building to recover to 2007 levels for another five to seven years. That makes a massive shortfall over the next decade between supply and demand from new households look inevitable.
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