The listed housebuilders have reported steadily increasing profits over the last two years, on the back of improved efficiencies, the building out of cheaper land acquired in the downturn, and selective development with a higher value product mix.
At the same time, weakness in the commercial sector and falling numbers of public sector contracts has helped to push down construction tender prices. This has worked in favour of those developing residential, particularly in the South East, where house prices have held steady, helping to bolster developer margins.
Completions, while running at half the levels achieved prior to the downturn, are slowly recovering in line with the rebuilding of housebuilder profit (see Graph 1).
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