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Categorized | Property

UK housebuilder Countryside reports profits up a third

Posted on November 29, 2016

Housebuilder Countryside Properties brushed aside fears about the health of the UK’s property market as it reported a 34 per cent jump in operating profits to £123m.

Concerns about a housing slowdown have been growing — last week Countrywide, a British estate agent, said transactions were running “significantly below” last year.

But on Tuesday Countryside, which develops housing in the south east, Midlands and the north west, said “demand for all tenures of housing, particularly in London and the south east, continues to be strong and resilient”. It added that reservations were “robust”.

Analysts said there was a growing difference between the new build and second-hand markets, which means UK housebuilders have still largely reported robust demand.

“The new-build market is in rude health, but second hand has been slow,” said Gavin Jago, analyst at Peel Hunt. “Housebuilders are willing sellers but the second-hand market is different — if you get a slowdown in activity, it can be a vicious circle.”

He added that the government’s Help to Buy scheme, which provides support for people wanting to purchase new-build homes worth up to £600,000, was helping this sector.

In the past month, UK groups Persimmon and Bellway have reported resilient trading, with sales rates ahead of last year. Taylor Wimpey, the UK’s third-largest homebuilder, said its total order book was ahead of a year ago.

Countryside chief executive Ian Sutcliffe also put the company’s resilience down to its partnership division, which accounts for just under half of the group’s revenues. In this business, Countryside works with local authorities and housing associations to redevelop public sector land into mixed schemes that include privately owned homes, affordable housing and rented properties.

“Government sentiment seems to be moving away from ownership and towards broader housing delivery and mixed tenure,” he said.

Profits at Countryside’s partnership division in the year to September rose 40 per cent. At the private housebuilding unit, which focuses on the south east and the London suburbs, profits were up by 30 per cent.

Reported pre-tax profits rose from £28m to £79m, while earnings per share were up from 4.4p to 13.6p. The company proposed a maiden dividend of 3.4p per share.

Mr Jago said it was “a very strong set of results”, and added that the company was on track to double its pre-tax profits over the next two years.

“All housebuilders had a bit of a blip around the time of the referendum but they have had a strong rebound,” he said.

Countryside’s shares were flat at 230p on Tuesday. They floated in February at 225p, and have since outperformed those of rival housebuilders such as Barratt, Taylor Wimpey, Persimmon and Bellway.