Bovis Bullish on U.K. Housing Market Despite Looming Rate Rise

A builder works in a window aperture during house construction at Persimmon Plc's St. Andrew's Park residential housing development in the Uxbridge district of London, U.K.
A builder works in a window aperture during house construction at Persimmon Plc's St. Andrew's Park residential housing development in the Uxbridge district of London, U.K.
Photographer: Jason Alden/Bloomberg

British builder Bovis Homes Group Plc said it’s confident it will withstand a rise in U.K. interest rates because of the urgent need for more houses in the country.

“Notwithstanding that housing may become more expensive to buy with a mortgage, the demand is pretty robust,” Chief Executive Officer David Ritchie said in an interview after the company reported a 9 percent rise in first-half pretax profit.

Shares in Bovis and U.K. competitors Barratt Developments Plc, Persimmon Plc and Taylor Wimpey Plc have risen sharply since David Cameron’s Conservative Party won the general election in May, with investors betting he will favor the industry.

While Bank of England Governor Mark Carney has said subsequently that the end of record-low interest rates is in sight -- a move that could affect housing demand -- Ritchie expected any increase to be managed carefully. “There is a strategic shortage of housing in the country and nothing is going to change that in the short term.”

The Government has spoken of the need to build more than 200,000 houses a year, but the industry is still only delivering about 125-130,000 homes annually, he added.

Bovis shares, which reached a record high last week, fell 5 percent to 1,138 pence in London at 11:10 a.m. as interim operating profit of 54.3 million pounds missed some analyst estimates. Half-year pretax profit rose 9 percent to 53.8 million pounds ($84 million) year-on-year.

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