Wilson rebuff to house price predictions
In a trading update released this morning, the group acknowledged that its selling prices had fallen during the year, but that David Wilson Homes, its core business, was on target to meet expectations from its 142 development sites across the UK.
It added that there would be "slight margin progression" from the second half of the year and said that it would enter 2007 with its strongest order book in recent years.
Analysts estimated that pretax profits from this year could reach £224 million. This year Wilson Bowden has increased the number of sales outlets and agreed to sell more homes at an earlier stage in the construction process.
The group, valued at about £2 billion,is thought to be the subject of a takeover battle between the rival builders George Wimpey, Redrow and Bellway, as well as HBOS, Britain's biggest mortgage lender, and a number of private equity bidders.
The confident outlook came as the Royal Institute of Chartered Surveyors forecast that house price growth would slow from 9 per cent this year to 7 per cent next year.
Price inflation reached a plateau last month, having risen for the thirteenth consecutive month. Further interest rate rises are expected next year.
Howard Archer, of Global Insight, said: "There are tentative hints that activity may have peaked and house prices will gradually lose momentum.
"The rate of increase slowed, which may be a very early sign that buyer interest is beginning to be hit by rising affordability problems. With pricing power currently significantly tilted towards the vendor, house prices are likely to see further strength in the near term.
"However, we suspect that growing affordability pressures resulting from higher interest rates, muted real earnings growth and elevated house prices will increasingly feed through over the coming months to squeeze buyers out of the market and curb house price rises."
Graham Brown, the finance director of Wilson Bowden, will step down at the end of the month. David Wilson, the chairman, announced this month that he would delay retirement for a year, while bid talks continue. Mr Wilson is in line for a personal windfall of £400 million if a deal goes ahead.