23rd Mar 2023 10:31
(Alliance News) - Crest Nicholson Holdings PLC on Thursday reported improving housing sales within a trading update covering the period to March 20 from November 1 last year.
The Surrey, England-based housebuilder said weekly sales per outlet rate in the 11 weeks since the start of the the calendar year was 0.52, rising 49% from 0.35 in the 11 weeks that started November 1.
Crest Nicholson said this reflected the ongoing and steady recovery in overall consumer confidence and housing market activity since the start of the year.
Average selling prices have remained with "an enduring lack" of housing supply, Crest Nicholson said, arguing the market remains resilient despite "clearly [softening]" in the previous two years of trading.
Crest Nicholson noted that build-cost inflation remains a challenge for housebuilders, with subcontractors anticipating a lower level of build activity. However, it expects build-cost inflation of a high single-digit to recede during 2023.
"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. In addition, 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," Crest Nicholson said.
"This is being reflected in our lead indicators. However, those with lower levels of equity are unsurprisingly finding it harder to purchase their first home and making it onto the housing ladder. Support for these potential buyers, in a higher interest rate environment, is going to be necessary if we are to see a full recovery in the housing market."
Looking ahead, while Crest Nicholson said the economic outlook remains uncertain, it remains confident in its ability to create value through development of its "attractive" land portfolio and plans to expand into new regions. It said the latter is on track and progressing well.
"The housing market fundamentals remain strong and the group continues to benefit from a strong balance sheet which gives it flexibility to trade in tougher market conditions," Crest Nicholson said.
On Monday last week, Crest Nicholson announced it signed a developer remediation contract with the UK government. This formalises its responsibilities to identify and remediate those buildings with potential safety risks.
Crest Nicholson said it held a provision of GBP140.8 million as of October 31 regarding its remediation obligations and remains confident that this is currently the best estimate of its expected future costs.
The self-remediation contract requires developers to fix unsafe buildings from the past 30 years. The new requirement follows the Grenfell Tower fire in London in 2017, which was made deadly by flammable building cladding.
Crest Nicholson expects to announce its half-year results for six months ending April 30 on June 8, at which point it will provide an update on its progress, including regarding its remediation obligations.
Shares in Crest Nicholson were up 0.6% to 208.90 pence each in London on Thursday morning.
By Greg Rosenvinge, Alliance News reporter
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