Westbury defends sales slowdown as land price fears grow

Westbury, the UK's eighth-largest housebuilder, is deliberately using house price rises to slow sales in booming areas because of worries about land price inflation.

The regions affected are parts of southern, central and eastern England.

Martin Donohue, chief executive, said last week: "In a fast-moving market, it is not a good idea to pursue forward sales more than four months ahead.

"We are determined that the recent improvement in margins will continue even if we have to hold back sales in areas where the market is in greatest danger of overheating.

"Our biggest concern is that margins will be dented by land prices rising faster than house prices can keep pace. The land market is severely under-supplied. Land is a very valuable commodity and we do not see any benefit in letting it go too fast."

One of Donohue's directors added: "It would be wrong to call it rationing, but where necessary we are putting prices up to slow down the rate of sales."

Announcing Westbury's annual results (12 months to February), Donohue said profit before tax doubled to œ23 million, with turnover climbing by 47 per cent to œ280 million.

Total sales of private houses increased by 35 per cent to 3,500 units, with the contribution from the core Westbury business growing by 11 per cent.

Westbury took a place in the top 10 league when it purchased Clarke Homes from BICC for œ61 million.

Its average selling price of œ77,000 (up 13 per cent) reflected an increase in the proportion of larger homes rather than any underlying surge in inflation. House price increases outside London and south east England are said to be "very modest".

Land in the buoyant south east, however, was 25 per cent more expensive. The operating margin moved in the right direction, stepping up from 9 to 10 per cent.

After pegging land costs to 22 per cent of average sale prices during 1996, Donohue said current pressure on land prices would make it hard to hold on to this cost ratio.