Bovis Homes expects building costs to jump 5%

Aaron Morby 8 years ago

Bovis Homes has factored in a 3%-5% rise in house building costs this year as subcontractors battle to restore eroded margins.

The southern house builder said that with activity and sales prices rising, the cost of building houses is also rising as material suppliers enjoy increased demand and subcontractors jump at the opportunity to raise rates.

But the firm said that market rises in sales prices are expected to at least cover these cost increases and would not hamper its expansion plans to deliver up to 3,600 completions this year.

Bovis Homes said it planned to add two more regional bases to its six present operational centres, raising business capacity to 5,000 homes each year.

David Ritchie, the chief executive of Bovis Homes, said: “The housing market is recovering with higher activity levels and improving house prices expected to more than compensate for supply chain cost increases.

“The group aims to deliver between 3,400 and 3,600 legal completions in 2014 and a stronger forward order book for 2015.”

Announcing results for 2013, which saw pre-tax profits soar 48% to £79m on sales up nearly a third to £556m, he said completions rose 19% to 2,813 homes.

Bovis Homes saw a 14% increase in average sales price to £195,100, mainly due to a mix of larger homes and a greater proportion of higher value southern sites.

The firm said it has been active in the land market, adding 3,737 plots on 27 sites to the consented land bank during the year.

In 2014 alone, 2,300 plots on nine sites have been added to the consented land bank.

This includes a major development of 1,658 consented plots at Sherford in Devon, where the land cost of the site was very low, due to the high level of infrastructure spend, which will be phased over the life of the site.

As a result, the peak funding on this long-term major project is expected to be between 1% and 2% of the group’s net assets.

Richie said that Sherford would be an anchor site within the South West region over many years, delivering a strong margin and return on capital employed.

Planning was also approved on three major strategic projects at Witney, Winnersh and Bishops Stortford, which will deliver over 1,200 plots to consented land in the future.

He added that Bovis was also on course to start up its first two private rented sector schemes under the Government’s Build to Rent scheme.

The two deals will involved building a total of 500 homes, of which half would legally complete this year.

Ritchie added: “With the current strong sales position and assuming current market conditions continue, the group is confident of its ability to deliver strong increases in volume, revenue and profit in 2014 with the aim of achieving a return on capital employed for the year of at least 14%.”




Latest news

Kier pulls off contracts league double in July

Contractor bags highest value of new work and tops rolling 12 months ranking
5 hours ago

Hinkley Point C giant water intakes craned onto seabed

Video: contractors complete one of the world’s most complex marine engineering projects
4 hours ago

Taziker revenue jumps 30% to record £73m

Multi-disciplinary engineering specialist boosts headcount to 366 staff
3 hours ago

Consultant buys scaffolding contractor

RSK Group makes MG Scaffolding its latest acquisition
4 hours ago

M&E specialist gears up for £16m Aston Martin package

Major package award on McLaren Silverstone site
4 hours ago

Plans in for Brentford 110-flat canalside scheme

Makers’ Yard mixed commercial and residential use scheme
3 hours ago

WSP to buy consultant RPS Group for £591m

5,000 staff at Oxfordshire based firm to join WSP
1 day ago

Countryside puts offsite factory up for sale

Offers invited for Bardon plant which is less than a year old
1 day ago

M&E specialist Spie UK arm returns to profit

French parent group launches a strategic review of UK operations after performance stabilises
1 day ago

Site boss fined for locking out safety inspectors

Police called to enter site before fire fighters rescue workers stranded on roof
1 day ago

Rebid starts for £200m M5 junction job

Cost inflation forces retender for £200m junction 10 rebuild near Cheltenham
1 day ago

New Downing Construction boss named

Andy Thomas takes top job as Ian Orton steps back after 24 years
1 day ago

Plans in for 600 homes at London Aylesbury estate

Notting Hill Genesis aims to start work next year on phase 2 of Southwark estate rebuild
1 day ago

Tide gets green light for UK’s tallest modular tower

Volumetric specialist to build 48-storey student skyscraper at Canary Wharf
3 days ago

TopHat cuts losses and aims for profit in three years

Modular specialist investing for future as latest results show £19.4m loss
2 days ago

Story Contracting names next chief executive

Andy Joy to be promoted to CEO as Jason Butterwork becomes vice chairman
2 days ago

Stalled £100m North London build-to-rent tower to start

Essential Living commits to start Swiss Cottage scheme six years after planning OK'd
3 days ago

Bidding starts for Pagabo £1bn medium works deal

Extra small project lot added in framework renewal
2 days ago

Vital funding deal for £50m A38 Midlands upgrade

Work could start early next year on A38 BREP now out to tender
2 days ago

Graham wins £16m National Railway Museum job

Firm seals pre-construction deal as new museum Central Hall gets planning green light
2 days ago

Demolition starts on half-built £48m Taylor Wimpey flats

Furious local residents blast house builder over "unbearable" noise
5 days ago

Civils contractor fined £600k after boy dies in drainage pipe

Workers find seven-year-old who suffocated on housing site
6 days ago

Plan for trio of towers at old Yorkshire Post site

Galliford Try advises on construction plan for Leeds student and build to rent towers
5 days ago

Insolvency to rival inflation as project cost threat

Inflationary pressures likely to peak this year before easing in 2023, but supply chain stress is growing.
5 days ago

B+K starts £300m Sheffield West Bar scheme

Funding deal triggers start on major mixed-use scheme
5 days ago

Willmott Dixon bags £44m Passivhaus leisure centre

Private builder prepares to start Staines-upon-Thames complex
5 days ago

Go-ahead for £160m Cambridge mixed-use scheme

Devonshire Gardens will consist of 70 private rental flats and 120,000 sq ft of offices
5 days ago

Construction buyers report first drop in output for 18 months

Civil engineering worst performing sector
6 days ago

Construction and infra margins hit 3.2% at Morgan Sindall

Contractor picking deals carefully as inflation continues to bite
6 days ago

Morrisroe Group revenue tops £200m

Pre-tax profit halves to £2.7m as cost inflation bites
6 days ago

Contractor services