Taylor Wimpey boss reject housing bubble fears

A home under construction. Picture: PA
A home under construction. Picture: PA
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THE boss of one of Britain’s biggest housebuilders has rejected claims that government support for buyers will create another bubble.

Earlier this week, outgoing Deputy Governor of the Bank of England Paul Tucker warned MPs that the government’s Help to Buy scheme must be a short-term measure only.

But Pete Redfern, chief executive of Taylor Wimpey, said the firm has experienced “meaningful improvement” in the last six months because of “growing customer confidence, improving sales rates and some small improvements in underlying prices”.

He insisted increased house prices were not “getting out of hand”.

He said:

“We want to see a set of conditions over the next 18 months which create stable to positive gradual recovery and government support is withdrawn. It is right in the short term. We don’t want to get to where the US got where it became dependent on it.

“I started running this business as a chief executive in 2006 effectively, just before things tanked. I have seen all the pain of what happens when a bubble comes to an end. We don’t want a bubble, we want stable selling conditions.”

The government scheme, which is currently only available to people taking out mortgages on new build properties, has not yet come into effect in Scotland. Instead, the Scottish Government has backed the Mi New Home scheme which is similar to Help to Buy but came into effect later and has a lower threshold. As a result, Redfern said the recovery in the Scottish house market was “lagging” the UK but was on a similar upward trend.

Taylor Wimpey and two other housebuilders said there had been the most significant improvement in conditions since the start of the credit crunch, indicating further signs of economic recovery.

Redrow and Gallliford Try also reported rising consumer confidence and the benefits of government stimulus schemes in their latest updates to the stock market.

Giving an update on the year to the 30 June, Galliford Try said forward sales were 15 per cent ahead at £313m and its average private sale price was up 5 per cent to £262,000. That will result in record results for the year to the end of June, it said.

Redrow said revenues were 26 per cent higher at £604.8m in the year to the end of June.

The builders’ buoyant trading echoes a recent upbeat statement from rival Persimmon, which said profit margins have soared to 15 per cent a year-and-a-half ahead of target, while it has also sold out a number of developments sooner than expected.

Figures from the Bank of England recently showed mortgage approvals soared to their highest level in three-and-a-half years in May, with 58,242 mortgage approvals for house purchases. That was up from 54,354 in April and the highest level since December 2009.

• Developer Gladedale Capital has unveiled the next phase of development at Quartermile in Edinburgh and will invest £10 million to build 31 luxury flats.

Dubbed “Q22”, it has been designed by Fosters+Partners Architects and is due for completion in late 2014.

Gladedale said it has sold 450 apartments out of a possible 900 planned for the former Royal Infirmary site.