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Housebuilder reports rising prices amid strong demand

TAYLOR Wimpey has seen house prices in Scotland start to rise more quickly in recent months amid continuing strong demand.

ON THE UP:  Strong demand from buyers has seen Scottish prices rise by four per cent compared to last year, according to builder Taylor Wimpey.
ON THE UP: Strong demand from buyers has seen Scottish prices rise by four per cent compared to last year, according to builder Taylor Wimpey.

Chief executive Pete Redfern said after stripping out changes related to different house types Scottish prices are running around four per cent ahead of where they were 12 months ago.

The business sold around 480 private homes here between January and the end of June with the majority of those at sites across the central belt.

Current locations include Glasgow, Edinburgh Bishopbriggs, Cambuslang, Lenzie and East Kilbride.

Mr Redfern said: "People have talked a lot about London and the south east and we have felt for a long time this is not just a London story.

"Actually most of the UK has been growing to some degree in our markets for the last two to two-and-a-half years.

"During the course of the last three or four months we have seen the regional markets in terms of price growth, move more strongly than London.

"Our sales rates in Scotland were the strongest in the northern part of our business, which takes in the north west and north east of England, and more or less on a par with our southern business."

Sales volumes in Scotland remain on course to be close to or exceed the 1,000 completions the company recorded in 2013.

While Mr Redfern says trends still appear strong he is aware of anecdotal cases of people delaying house purchase decision until after the independence referendum vote in September.

He said: "We are not seeing things stop but there is a note of caution for those with big decisions."

However there is no slowing of Taylor Wimpey's investment in Scotland or its commitment to operations here.

Mr Redfern said: "We see Scotland as a good and important market.

"We have a commitment to the Scottish business. Whilst it is about 10 per cent of our business overall we authorised new land that was overall more than 10 per cent of our [land] acquisitions in the first six months of the year."

Mr Redfern believes recent mortgage market reforms and caps on certain levels of borrowing are positive for the housebuilding industry.

In his view those moves should help to remove riskier mortgage elements and provide a more sustainable financial platform for the sector.

He also refuted any suggestions of a pricing bubble.

He said: "Across the market there is a medium to long term risk the growth goes too far but I don't think we are there yet. It is a reasonably healthy pace in most regions.

"If anything it has been a bit too strong in London and the south east so we are happy it is calming down.

"Four to five per cent [increases] is a pretty healthy place particularly coming off the back off a downturn."

Across the UK Taylor Wimpey saw completions rise 11 per cent to 5,766 with average prices up from £188,000 to £206,000.

The UK Government backed Help to Buy scheme, introduced later in Scotland than in other countries, was said to have been used in 42 per cent of sales in the first six months of the year with a further 2,000 transactions using the financing in the pipeline.

Analysts at JP Morgan Cazenove said it was a "robust" trading statement with volumes ahead of its estimates.

Taylor Wimpey's house broker Jefferies predicted full-year pre-tax profit would grow 60 per cent to £440 million with further strong increases in coming years.

Separately, the Federation of Master Builders Scotland said there were growing signs of stability among small and medium enterprises in the sector.

Gordon Nelson, director for FMB Scotland, hopes recent planning changes and Glasgow's £500 million city deal will help.

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