20th Mar 2014 11:11
LONDON (Alliance News) - Housebuilder Crest Nicholson Holdings PLC Thursday said reservation rates, selling prices and forward sales all rose in the first few months of its financial year as it continued to benefit from the recovery in the UK housing market and the government's Help to Buy scheme.
In a management statement released alongside its annual general meeting, the company said the extension to one part of the Help to Buy scheme to 2020 that was announced by UK Chancellor of the Exchequer George Osborne Wednesday would provide more certainty for business planning in the medium-term, supporting investment in the skills and capacity required to deliver more new homes.
Osborne said that the first phase of the mortgage financing scheme will be extended by four years to 2020. That part of the scheme makes some buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit.
UK house prices have been recovering strongly through 2013 and into 2014, particularly in London and the southeast of England. However, some economists have warned that the market may be rising too quickly and is in danger of becoming a new bubble, fueled by the Help to Buy scheme. The Bank of England has said this isn't yet the case and it is keeping a close eye on the market.
Critics of the scheme also say it is doing little to encourage the increased housebuilding needed to alleviate a shortage of available supply, particularly in London and the southeast. However, Crest Nicholson's comments suggest that the extension will in fact encourage home builders to invest in new sites.
Crest Nicholson said its open market reservation rates have been 0.86 per outlet week between November 1 and March 7, up 13% on the same period a year earlier. Average selling prices grew "steadily" in the period, it said, with prices in the Home Counties in particular starting to reflect the 'ripple effect' of strong values in the London market.
It said forward sales for 2014 and beyond now total GBP330 million, up 50% from GBP220 million a year ago. It said 58% of forecast fiscal 2014 legal completions had been taken by March 7.
"Market conditions throughout our areas of operation continue to be favourable and the business is responding by increasing our delivery of new homes," Chief Executive Stephen Stone said in a statement.
Some housebuilders had reported last year that the supply chain was struggling to keep up with the pickup in housebuilding and there was a shortage of products like bricks. However, Crest Nicholson said those pressure have now largely been accomodated.
"Whilst some costs have risen and delivery lead-times lengthened, we remain on track to deliver our planned production outputs for 2014 of approximately 2,500 units," it said.
"Against a backdrop of rising purchaser confidence, increases in mortgage approvals and generally improving economic conditions, the group is very well positioned to continue driving business performance," it added.
Crest said it has bought six new land sites in its financial year to date, with a total of 389 plots at an estimated gross development value of GBP167 million.
"Sufficient plots have now been secured to deliver our forecast volumes for 2014 and 2015 and almost all the plots forecast for 2016 delivery are either secured on are in solicitor's hands," it said.
The company's financial year starts November 1. It will report its results for the six months to April 30 on June 17.
Crest Nicholson shares were up 0.3% at 399.1 pence Thursday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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