UK House Builders See Further Growth In 2007
While market observers are forecasting a flattening out of UK house prices, two prominent house builders, in the shape of Barratt Developments and Persimmon have recently reported robust orders, strong demand and expectations of further house price rises in 2007.
The fact that Barratt Developments was willing to invest some £2.2 billion in the recent acquisition of competitor Wilson Bowden shows how confident they are for both the short and longer term. Barratt Developments reported an increase in the average cost of their houses to some £165,000, although this is not the average for the country as a whole.
The housing market is vital to the performance of the UK economy as many home owners have taken out maximum mortgages, chasing their housing dreams. Historically the housing market has always led the economy upwards, and always precipitated a fall when demand wanes. There is no reason to expect this current cycle will be any different, but many “professional†housing investors are starting to become cautious, with some property investors beginning to bank some profits.
We will receive a further update in 6 months time , when both Barratt Developments and Persimmon will report 6 month figures, together with an update on their optimistic view of the future. It will be interesting to see if they are as upbeat in 6 months time, as this will offer an indication of the future direction of the economy.
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