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Margin improvements for housebuilders

12 Nov 12 Housebuilders report growing stability across the housing market, with sales steady or improving and margins on the up.

Bovis Homes, Redrow and Taylor Wimpey have all published trading updates today, with Bovis the most upbeat.

Bovis said that it was on course to deliver a strong increase in revenue in 2012, with an operating margin of 13%, up from 10% last year. This will generate a return on capital employed of 7.5% for 2012, up from 5% in 2011.

Bovis has already secured sufficient reservations to deliver its anticipated full year legal completions.  Net private reservations achieved in the 45 weeks to 9 November 2012 were 1,669 (2011: 1,517). The Group is currently operating from 83 active sales outlets and expects the number at the year end to approach 90, with in excess of 30 new sales outlets launched during 2012. Prices are stable but by building bigger houses and focusing more on the south of England, the average sales price for Bovis has gone up form £180,000 last year to £190,000 now.

Like Bovis, Redrow has benefited from a focus on London and the southeast. Although house prices have remained stable for the past two years, Redrow’s average selling price is up 22% on this time last year, at £243,000.

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Redrow shareholders hear from chairman Steve Morgan at the company’s annual general meeting today. "Redrow has continued to make steady progress in what are challenging but stable market conditions,” he says. The meeting is expected to be lively, given Mr Morgan's recent attempt to buy out smaller shareholders and take the company back into private ownership.

Taylor Wimpey also reports improved trading, in part due to improved returns on land bought more cheaply after the downturn.

Taylor Wimpey is now fully sold for its targeted 2012 completions and is building its order book for 2013 completions.  The current order book for future completions is £1.11bn, up from £1.02bn a year ago, thanks to an improving the private order book.  Margins are also improving, the company said.

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