Rising sales point to an improving housing market says Gleeson

THE building sector could be seeing signs of recovery according to Gleeson with house sales ahead of this time last year.

The urban regeneration specialist reported today that house sales by Gleeson Regeneration & Homes, which is now headed by former Shepherd Homes managing director Jolyon Harrison, were up and that reservations were ahead of expectations.

Selling prices appear to have stabilised or even in some areas to have improved.

However, a high proportion of sales are only being achieved with the assistance of shared equity. Moreover, mortgage availability, particularly where borrowers require a high loan-to-value ratio, remains restricted.

The group’s commercial property development business has not committed to new projects since March 2007 and is in the latter stages of disposing of its remaining portfolio.

As expected, Gleeson Strategic Land did not sell any sites with planning permission during the period. However, the demand for development land from housebuilders has increased recently and a number of sites are expected to be brought to market during the current financial year.

Gleeson Capital Solutions continues to progress potential PFI opportunities and is one of two final bidders on a PFI social housing prospect in the North.

Powerminster Gleeson Services continues to be profitable and cash generative and is managing to maintain margins within a sector which is becoming more competitive.

Gleeson Commercial Property Developments sold out of three sites during the period and now has only two sites remaining, with a net book value of £5.9m.

The group continues to be cash generative with significant progress made since the year end. Net cash was £19.7m at November 18 – an increase of £8.8m on the £10.9m June 30 2009.

It said in a statement: “As indicated above, there have been some signs of improvement in housing market conditions compared to the same period in 2008.

“However, a sustained upturn in demand will require an increase in both mortgage availability and consumer confidence. In the North in particular, it is not yet clear when this will be achieved.

“Against this background, the group’s main focus will continue to be on rigorous cost control and cash generation. This will enable it to lay the solid foundations on which sustained growth can be achieved once more normal conditions return.”

Gleeson is involved with a number of private finance initiative (PFI) projects in the region including one to build houses, flats and bungalows across Leeds.

The 25-year project will delivered on behalf of Leeds City Council by Leeds Independent Living Consortium in which Gleeson has a 33% stake.