House builder updates fuel confidence

LONDON (Reuters) - The price of a new homes has started to climb, according to house builders Redrow (LSE: RDW.L - news) and Taylor Wimpey (LSE: TW.L - news) who also reported stabilising sales, bolstering the sector and signs of growing consumer confidence.

Taylor Wimpey, Britain's second largest house builder by market value, said on Wednesday it was fully sold for 2009 and was bullish on a recovery, albeit at a sluggish pace.

The average price for private homes is 9 percent higher than the first half at 177,670 pounds, it said.

"The underlying market is more stable than statistics tend to imply. So in that way, for our own business, we're not expecting to see a sudden downward shift again," chief executive Pete Redfern told Reuters.

"The UK stabilised earlier (than the United States) but the price recovery is likely to be a bit slower and a bit more of a grind whereas in the U.S. there might be a bit more pace behind it," he said.

Taylor Wimpey shares were up 9.2 percent at 11:15 a.m., while Redrow was 7.6 percent higher and rival Persimmon (LSE: PSN.L - news) was up 10.3 percent.

Redrow, one of the smaller listed British house builders, said total net private reservations since July were up 47 percent, averaging 45 homes per week. "Achieved prices are slightly ahead of our own expectations with private reservations to date averaging 149,000 pounds," Redrow said.

A string of other reports on Wednesday also pointed to a rise in confidence, with Nationwide Building Society saying consumer morale was at its highest in 18 months while retailers such as Marks & Spencers and Next posted upbeat results.

House prices showed their first annual rise in 19 months in October, according to mortgage lender Nationwide.

Redfern said there been no "big change over the last two months. It's a continuation of reasonable conditions which are so much better than what people expected. But we're still having to work quite hard to get the right number of sales."

Taylor Wimpey said the value of its current order book was 1.00 billion pounds compared with 1.06 billion a year ago.

DRIVE DOWN DEBT

Recession and rising unemployment have led to house prices falling about a fifth since their peak in the autumn of 2007, forcing many house builders to seek additional capital.

Redrow, which launched a 150 million pounds rights issue in September to pay down debt and buy Harrow Estates, said on Wednesday it had received a 97 percent take-up.

Barratt Developments (LSE: BDEV.L - news) had a 92 percent rights take-up after its 720 million pound cash call in September.

Taylor Wimpey raised 533 million pounds in a share sale in May to reduce its debt pile.

Taylor Wimpey said its current order book in North America stands at $950 million (575 million pounds) compared with $1.21 billion last year, while Redfern quelled speculation of a sale of its North American housing operations to cut group debt.

Net debt is down to 860 million pounds from 1.87 billion last year with a target below 800 million.

Robin Hardy at KBC Peel Hunt said the sale of the north American businesses would help reduce its debt further "but would take away the old solid operation in the group (Canada) and the early recovery angle (the United States)."