'Record' demand for housebuilder

WILSON Bowden has reported record demand for property in the first half of the year, helping the housebuilder to its highest ever half-year profit.

Pre-tax profit before goodwill amortisation rose 29% from a year ago to £118.2m for the six months ending June. Once these factors were stripped out, profits were £115.6m compared to £91.4m previously.

The company said the housing market remained 'robust with demand at record levels' in the first few months of the year and that since there had been only 'slight cooling' in the market following increases in interest rates.

'While interest rate rises undoubtedly had a calming effect on the market, we continued to sell strongly throughout the first half,' said chairman David Wilson. However, he added: 'Comparisons will be confused in the second half of this year as the summer of 2003 was the strongest in living memory with the release of pent-up demand following the initial stages of the Iraq conflict.'

Wilson's comments chimed with the latest monthly survey from the Nationwide building society, also released today. The study showed UK house prices rising just 0.1% in August from July, the smallest monthly increase since October 2001. That compares with 2.1% the previous month.

Wilson Bowden said turnover was up 21% from £490.8m to £592.9m and that it expected full year results to meet market expectations. The interim dividend was hiked 27% to 9.5p.

Britain's housebuilders have enjoyed a bumper few years as cheap borrowing costs, low unemployment and a housing shortage have fuelled a house price boom. This has led to a surge in share prices in the sector.

However, analysts say the rise in profits is still not fully factored into share prices, with investors wary of a property market collapse, the sector remains one of the cheapest on the stock market.

Broker Bridgewell Securities repeated its 'overweight' recommendation on the shares, saying the figures were at the top end of market expectations. However, it said it was concerned that the group alluded to the property market cooling.

The shares were down 9p at 1096p by mid-morning.