Crest Nicholson says housing market recovering

Crest Nicholson has indicated the housing market is slowly recovering from the post mini-Budget turmoil with an increase in the number of sales it is making per site each week. 

The Surrey-based housebuilder said in a trading update yesterday its sales per outlet per week had gone up from 0.35 in the 11 weeks after 1 November last year to 0.52 in the past 11 weeks. 

It said this “reflects the ongoing and steady recovery in overall consumer confidence and housing market activity since the start of the year.”

House sales were hit last year after the disastrous mini-budget in September, which pushed mortgages up to 14-year-highs. 

The firm, which has reported pre-tax profit for the year to 31 October down 62% due to a £105m developer pledge charge, noted in its statement that “the most likely economic scenario we articulated back in January continues to be realised”, which is that selling prices have remained “robust” because of a lack of housing supply.

It said: “While the economic outlook remains uncertain the housing market has continued to demonstrate its relative resilience.”

Crest Nicholson’s board said the firm remained “confident” in its “ability to create value through the development of its attractive land portfolio and its plans to expand into new regions, which is on track and progressing well”. 

The update explained the “housing market fundamentals remain strong” and “a strong balance sheet” meant the house builder was well-placed to weather the tougher market conditions. 

Indices over the past few months have shown house prices have dropped, although still remain high. RICS said this month that price growth was “deep in negativity”, albeit Rightmove indicated prices have slightly risen since last month

Crest Nicholson pointed out mortgage rates have “progressively reduced as the outlook for future interest rate rises and general economic stability have both become more favourable since the start of our trading year”. The Bank of England yesterday raised the base rate to 4.25%. 

The housebuilder added: “Lower transaction volumes have intensified competition for new mortgage business and led to increasingly competitive rates for those buyers with higher levels of equity, which in turn is giving them confidence to move home. This is being reflected in our lead indicators.” 

Although, it also noted that “those with lower levels of equity are unsurprisingly finding it harder to purchase their first home and making it onto the housing ladder.” Crest Nicholson said support would be needed for first-time buyers, particularly with the higher interest rates. The end of Help to Buy, for which the deadline has been extended to 31 May, is expected to make it more difficult for people to get onto the housing ladder. 

Build cost inflation continues to be a challenge for housebuilders, the trading update said, which has seen “greater competitive intensity for work and pricing”. 

The overall “basket of high single-digit percentage build cost inflation will recede during 2023”, the housebuilder predicted. 

 Crest Nicholson was among the developers to have signed the government’s cladding contract by the deadline of the end of last Monday. 

By October last year the group had seat aside £140.8m to remediate its tower blocks and said it was “confident” this would be enough to meet the costs of fixing safety defects in the blocks it was responsible for in the future. It will update the market on its progress on remediation in its half year results, the housebuilder said. 

 The firm expects it will announce its half year results up to 30 April on 8 June.