George Wimpey has issued a trading statement this morning. The good news is that in the UK, the housing market has remained stable….but the bad news is that the US housing market has been on a downward price slide.
Since the beginning of August, the UK housing has remained stable, said Wimpey. “We have achieved sales rates above those achieved during 2005 and we expect total UK volumes for 2006 to be ahead of last year,” said the trading statement.
The UK housing market remains price-sensitive, although Wimpey has managed to rein in the need to resort to cash incentives and as a result it is banking on achieving “modest price increases across the business”.
The same can’t be said of the US housing division as the market has weakened over the summer, triggering an oversupply that has not yet begun to ease.
Not surprisingly, perhaps, the biggest hits are being taken in the markets that had been the strongest in the past three years. The Texas market, which historically has been the weakest of Wimpey’s US markets, has continued to perform well.
There is a knock-on effect in the US land market where Wimpey is renegotiating, and in some cases cancelling, existing deals. It is writing off some option costs.
Overall, Wimpey reported that the strong performance in the UK is “largely offsetting the tougher conditions in the US”.