Nationwide's deflating mortgages spoil Bovis' property party

If Nationwide's results are anything to go by, the property market looks like it's slowing down, but somebody better tell Bovis.

by Adam Gale
Last Updated: 06 Jul 2015

Bovis Homes must have been pretty excited about its latest results - the news was good, after all. Its first half sales in the six months to June 30th were up 54% on the same period last year, while average prices rose 11% to £210,000.

Looking to capitalise on the apparent property boom, Bovis said it bought 23 new plots of land with a capacity for 4,597 new homes in the period.

On the face of it, this optimism might seem justified. Until very recently, the housing market had been booming, in London and south east at least, with Halifax’s latest house price index in July showing a yearly increase in home values of more than 10% for the first time since 2007.

But corporate results are much like parties – you can have one planned for ages, but all it takes is one of your friends to hold an impromptu bash on the same day and the whole thing falls flat.

Nationwide Building Society announced today that their gross mortgage lending to June 30th was down 9% on the same quarter last year. Talk about a party pooper.

The building society’s news is a further sign that the housing bubble reflected in Bovis’ results might be deflating. Earlier this month, Rightmove said house prices actually fell 2.9% compared to the previous month, the biggest summer fall ever recorded. Moreover, construction lags price rices, so a glut from companies like Bovis could be the sign of the top of the market.

This unfortunate piece of timing is unlikely to upset either company for too long, as both reported strong financial results. Nationwide’s underlying profits were up 117% to £263m on the same quarter last year. Not to be outdone, Bovis’ pre-tax profits were up 166% to £49.4m on the first half of 2013. For the time being at least, the property party isn’t over yet.

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