McCarthy cashes in on 'last-time buyers'

RELENTLESS demand for retirement homes helped push the average sale price for McCarthy & Stone up 18% on a year earlier to £164,000, despite a 'challenging' property market.

The rise, down slightly from an annual gain of 18% six months ago, compares with much lower reported gains for builders of traditional houses.

Wimpey said last month prices at its George Wimpey division rose 8%, and just 2% at its Laing arm, while Barratt said in January that prices were up only 2% on a year earlier.

McCarthy, the country's largest builder of retirement homes, has long argued that demographics will work in its favour - the UK's post-war baby boom generation is beginning to reach retirement, therefore increasing demand for more suitable accomodation.

The firm, whose homes for the over-60s feature alarm systems, wheelchair access and communal lounges, said it had sold 792 homes in the half-year to 28 February, up from 780 a year earlier.

It said reservations were 'comfortably' ahead of last year. The statement added: 'Over the six month period the market has been challenging and to achieve a small increase in unit sales with enhanced selling prices and a maintained forward reservations position is a good achievement.'

The group said it had paid £18.4m to clear a finance lease on the head office. It also spent £12.7m on the repurchase ofordinary shares over the past 12 months. It expects to post 'satisfactory' results in April.

McCarthy shares, which have more than doubled from 320p in the past two years, were down 1½p at 691p by mid-morning. They had been as low as 685p in early trading.

Broker Numis reiterated its 'sell' advice on the stock, saying the 792 homes sold fell 28 short of its estimate. It downgraded its interim pre-tax forecast to £53.5m from £54m.

Meanwhile, Merrill Lynch stuck to its 'buy' rating, saying the update was more robust than expected. The broker said the biggest threat to the group, as to all housebuilders, was a sharp jump in UK interest rates - but believes such a move is unlikely. It stressed that McCarthy & Stone remained a niche player in the sector.