Gleeson sees sales drop 14% in ‘challenging’ year

The number of homes sold by housebuilder Gleeson dropped by 14% in the year to June as it was hit by the fall out from the economic turmoil in the wake of the mini budget.

The listed firm, which has historically sold houses predominantly to first time buyers, said in a trading update that it sold 1,723 homes in the year, down from 2,000 the year before, putting it on course to meet analysts’ expectations.

The news comes after £347m turnover Gleeson, which is under the leadership of new chief executive Graham Prothero following the departure of long-time boss James Thomson last year, announced it was cutting around 15% of staff at the start of the year to build a “leaner” business.

It said today that it had now reduced the firm’s previous nine operating regions to just six, resulting in an annualised cost savings on overheads of £3.2m, at a one-off cost of £1.0m.

The firm said it had a achieved a net reservation rate of 0.64 homes per site per week in the last six months, actually slightly higher than the 0.62 achieved in the same period last year, and that it had “encouraging prospects” for the year ahead.

However, that figure included bulk sales, with Gleeson reporting that without bulk sales, it achieved a reservation rate of just 0.44 homes per site per week, with a 19% cancellation rate.

The firm said the second half of the year saw it complete the sale of just 829 homes, down 23% on the 1,068 completed in 2022, which it said reflected “the downturn in the wider economy and the immediate impact on buyer confidence as a result of higher interest rates.”

The cost of living crisis, rising interest rates and cancellation of Help to Buy saw the proportion of first time buyers acquiring Gleeson homes drop to 50% from 71% the previous year, with a fifth of purchasers over 55. The firm said that while it expected demand from first-time buyers to continue “at the levels seen through the last few months”, it anticipated that this would be compensated for by increasing “interest from other value-driven buyers […] as purchasers look to take advantage of Gleeson’s more affordable price points”.

Graham Prothero, chief executive, said he was pleased with the performance given a “challenging economic environment”.

He said: “We have taken advantage of the quieter market to restructure Gleeson Homes, putting the business in great shape to grow as the market recovers. The changes we are implementing in the business for the new financial year will further improve our competitiveness in the current market, and position us well for gradual stabilisation in the economy.

Gleeson’s share price fell just over 2% on opening today.