Help to Buy, the new housing benefit?

Bovis Homes reported today, following on from a number of trading statements towards the end of last week from other house builders and as expected the news was good.

David Ritchie, the Chief Executive of Bovis Homes Group PLC said:

"The Group has performed well in the first half of 2013 with a significant further improvement in housing profit, delivered from the ongoing successful execution of the Group's growth strategy. Trading in the first half of 2013 has been strong and the Group has achieved a 40% increase in private reservations compared to the same period in 2012. Continuing its success in the land market, the Group has added 2,767 new consented plots to the land bank. With the positive progress in executing its growth strategy, the Group is well positioned to deliver higher shareholder returns."

It goes on.

Market conditions

Even though the general economic background remains challenging, the housing market has shown signs of strong improvement. Consumers are increasingly able to access mortgage finance and the launch of the Help to Buy shared equity scheme, replacing FirstBuy, has had a positive effect on customers' confidence to buy a home and their ability to transact. These positive effects are expected to support greater activity in the new homes market, which in turn will provide an impetus to the number of new homes built. The Group continues to view positively the Government's initiatives to support the housebuilding sector.

http://www.digitallook.com/news/rns/21012367-11178/BVS-Trading_update_html

Of course it does.  How can any company not be thankful that the Government is potentially poring billions of pounds in taxpayer money its way? Supposedly this is to kick start a market that hadn't really seen a big fall after the financial crisis set in, but in reality was effectively dying a death from inactivity because of what happened before the financial crash.

Telford Homes - impressive trading update

Because of the reasons given here it is difficult not to be bullish about UK house building stocks and if further proof were needed it came in a trading update from Telford Homes today. Reading through the high points it is difficult to believe that the UK housing market, at least in terms of sales, is going through a bit of a slump, but Telford is London biased. Many housebuilders seem to be reporting good business, something which can only be increased by further Government intervention.

The company reported.

Exceptional levels of demand with contracts exchanged for the sale of 803 open market properties in the year to 31 March 2013 (2012: 460) Strong demand from overseas investors for London property; however over 60 per cent of the exchanges in the year were sold to UK buyers Already 94 per cent pre-sold for the year to 31 March 2014 and over 50 per cent pre-sold for each of the two following years

Significant improvement in both gross and operating margins

Profit before tax for the year to 31 March 2013 will be ahead of market expectations

Net debt reduced significantly to under £35 million (2012: £54.6 million)

 The outlook presented today is about as positive as you could want it.

Outlook

The London property market remains encouraging and the Group's forward sales position, increasing margins, healthy development pipeline and enhanced financial strength are all reasons to look forward to the next few years.

The Board is confident that substantial growth in profit levels can be achieved over the next three years from the existing pipeline and has a long term strategy to further this growth, in London, over the next five to ten years.

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11554068

The dividend yield on this one is pretty low and the P/E looks stretched, but you pay for quality like this. Momentum in the share price is also up so things look stretched here as well, but as can be seen on the weekly chart below, a new breakout appears under way.