Philip Davies, chief executive of Linden Homes, has predicted that there will be no big mergers in the sector this year because of the low rating of housebuilders on the stock exchange.
Davies said his own company was still in the market for acquisitions, but added that “the balance isn’t there at the moment”.
“The quoted housebuilders’ price earnings ratios have dropped so I wouldn’t expect anyone to sell at those prices. We will probably have to wait to 2005 before we see prices meeting vendors’ expectations.”
Davies was speaking after his firm, which went private in 2000, posted results for the year to 31 December 2003. Turnover was up £14m to £238m and pre-tax profit edged up £2.5m to £25.4m.
Davies said the firm’s growth had been less than expected last year because of the slow planning system. Unit sales were down last year to 1048, compared with 1085 in 2002.
He added that this year had been stronger – 580 homes were sold or reserved to the end of this April – but the market had experienced a slowdown in May and June.
He said: “It’s more of a real market now. Demand will be fairly steady.”
Davies said that the firm was now concentrating on bigger sites, partly through a joint venture subsidiary with the Bank of Scotland.
Davies said the firm’s planned expansions into Berkshire and Lancashire were going ahead, with three sites bought in Berkshire and two in Lancashire.
The firm has seen a change in management with Ian Randall, former Laing Homes director, joining as managing director of Linden’s South-east operation. He replaced Chris O’Sullivan who has moved into a group role as major projects director.