The Market

The month
There is a recession on the way. That's what the city experts are saying. But no one has told housebuyers. Consumer confidence is still holding, sales, completions, registrations and prices are all up. Interest rates are down. Housebuilders are gambling on boom, let's hope bust isn't around the corner.

Private starts
Housing market activity:
Registrations in the North East, North West, Scotland and Yorkshire and Humberside are well down. A band from Wales through to the East is holding with single figure increases and the South East and South West are down. London booms – up 43.3%.

The Business

Stockwatch
n Morgan Sindall produced a 75% rise in pre-tax profits to £10.1m in the six months to 30 June. Its Lovell housebuilding division increased operating profit by £800 000 to £1.9m on turnover up £16m to £66m. Carillion's social housing arm, bought in July, will add turnover of around £80m a year.

  • George Wimpey and Alfred McAlpine have agreed the sale of McAlpine's housebuilding operations for £461m cash. The deal will cut 450 administrative jobs and achieve annual savings of £18m. Wimpey plans to reduce the number of homes built by the group to 12 000-13 000 in 2002 from the joint figure of 13 847 last year, saving £200m in land acquisition costs.

  • Bellway shares rose after the market was told that results for the full year to July 2001 would be "highly satisfactory". The board said it expected to sell a similar number of homes as last year at a higher average selling price. Analysts predict full year pre-tax profits of around £100m, up from £89.1m.

  • Galliford Try has acquired South West-based Knapp Group for just over £4m. Knapp owns or controls 193 plots on five sites and the deal also gives over its Exeter head office for residential development. Knapp made a pre-tax profit of £600 000 in the year to 31 January.

  • Tay Homes has pulled out of talks with Country and Metropolitan after negotiations failed to improve what it says was the "wholly unacceptable" offer of 113p per ordinary share. Country and Metropolitan claimed it needed more information to increase its offer while Tay said Country and Metropolitan's 300% gearing would be "unacceptably high". Country and Metropolitan has a 24.6% stake in Tay.

    Business fact: background on UK housebuilders
    Countryside Properties' Copthorn Homes has secured three major schemes in London worth around £50m. It will be developing 75 mixed-tenure homes on a 0.4 ha site in Vauxhall. Detailed planning consent includes 57 apartments and town houses for sale and 18 apartments for rent. For Uxbridge Road, Ealing, the proposal is to build a mixed-use scheme on a 0.10 ha site. Subject to planning permission, the development will include 29 new and refurbished homes, of which eight will be shared ownership. Copthorn Homes is also developing 61 new apartments as part of the regeneration of the Edward Woods Estate in Hammersmith.

    The Trends

    White goods watch
    UK sales of dual fuel cookers:
    The UK cookER market has been under severe price pressure for the past few years. However a star has emerged which has fuelled some value growth – the dual fuel cooking sector.

    A mixture of previous experience, retailer emphasis, and trends in cooking, along with better designs and prices have meant that UK consumers are now much more likely to use a gas hob and an electric oven. Even though the trends in range cookers are the bulk behind the value growth, a similar trend has emerged in built-in cooking.

    The biggest increase has been for units with conventional electric ovens, though fan-assisted models have also seen an increase. Standard 600 mm units have shown a significant 20% rise as have, surprisingly, narrower 490-520 mm-wide models. Large range cookers of more than 910 mm width have also shown an increase.

    All this is very good news for a market which of late has seen little in the way of value added. Dual fuel could certainly be an attractive item for housebuilders to start providing as an optional extra – or they could even include it as standard as an additional incentive should the market slow down.

    "With dual fuel cookers selling at a premium, it looks as if a much higher number of households will have dual fuel capabilities in the near future," says Aaron Rattue, account manager at Gfk Marketing Services.

    Dis you know?
    An index measuring optimism among US homebuilders rose to a nine-month high in August, a sign of growing demand, despite fears of a recession in the US. The National Association of Home Builders' housing market index increased to 62, the highest since November. (Source: Financial Times)