Bovis says no stability yet in housing

By Lorraine Turner

LONDON (Reuters) - Bovis Homes Group (BVS.L) said reservations had risen in the first half but echoed comments from peers that house buying activity remained capped by a tight mortgage market, dashing hopes of a near-term sector recovery.

"Activity has to increase before we can start to think about the housing market in general becoming a more stable place," Bovis Chief Executive David Ritchie told Reuters on Friday.

Net private reservations jumped 92 percent to 901 in the six months to end June compared with the previous year and private completions rose 18 percent, though this was offset by a decline in social housing completions, Bovis said.

Completed sales overall fell 11 percent to 754 homes and Bovis said net sale prices, which fell 18 percent in the first half, will continue to weigh on margins and gross profits.

A more positive spring selling season and pent-up demand has helped lift shares in British housebuilders .FTASX3720 by some 12 percent since the end of last year, as home buyers slowly return to the market.

But indications of a permanent recovery in the sector, with houses losing a fifth of their value since the start of the downturn, are yet to emerge as major players such as Barratt Developments (BDEV.L) gave cautious trading updates this week.

Ritchie said prices, which have begun to stabilise in recent months, may fall further in the rest of the year. "Pricing is still, at best stable ... There is potential for further downside on pricing in the second half, we've got some uncertainty over unemployment."

Bovis said price stabilisation and lower debt, reduced to 14 million pounds, will enable it to pursue land investments and ramp up of building activity in the second half.