Speaking at the group’s year-end results launch, Marsh said: “It is of some concern that government may use the blunt instrument of interest rate rises to counter the strength of the housing market in the South-east. It would be a great pity because it would dampen down the rest of the market.”
Marsh predicted that the UK construction market will grow at a steady 1-2% a year in real terms for the next few years. “This is the first time we can plan for a reasonably stable market, rather than the boom and bust we have seen in the last few cycles,” he said.
The company lifted profit before tax by 19% to £4.5m, on turnover up 23% to £226m, for the year to 30 June 1999. Private housing turnover was up from £32m to £42m, but operating profit rose only 2% to £4.75m because margins were down from 14.4% to 11.4%. Marsh put the drop in margins down to planning delays on some sites in the East Midlands, even though average selling price was up 20% to £86 400 and completions were up 12% to 549.
He predicted that 15% growth in average selling prices by the next year end – 5% from inflation and 10% from a higher-priced housing mix.
The construction arm lifted operating profit 48% to £1.8m on turnover up 22% to £184m. Marsh forecast 15% growth in turnover for the coming year and 75% growth over the next four years.