Crest Nicholson halts opening of new division as forward sales slow
British housebuilder Crest Nicholson has halted the opening of its third new division as interest rates dampen the desire to buy a home.
The FTSE250 housebuilder is not the first to voice caution over rising rates, which have pushed up mortgage costs for many – deterring Brits from jumping onto the property ladder.
Forward sales in the past three months have fallen behind the rate seen a year ago.
The company has booked £526.2m in orders as of last week – the equivalent of 2,038 units, as opposed to £623.9m and 2,502 units 12-months prior.
In a statement today, chief executive Peter Truscott said: “Given the well-publicised economic conditions we believe it is the right decision to defer the planned opening of a third new division and adjust the pace of growth in our existing ones until a more stable environment returns.
“The UK is clearly facing a challenging macro-economic outlook, however we remain confident in the long-term fundamentals of the UK housing market. The strength of our balance sheet underpins this conviction and the delivery of our medium-term growth strategy.”
Shares sank 1.5 per cent to 217.80p per share by mid-morning.
Analysts and brokerage Jefferies said: “This trading update lacks some of the data provided by others, but the message is one of being ‘similar to peers’.
“There is no update on land buying since the mini-budget. At our recent meeting, however, management indicated that while they have stepped up the required hurdle rate, they have not exited the market completely.
“Again, the company has reiterated that while the board recognises Crest is overcapitalised, they do not see now to be the time to step-up distributions.”
Earlier this week, Landsec and British Land – two of the largest real estate investment trusts in the country – took profit and portfolio value hits as rates rises sting.
Bosses at Crest Nicholson, however, have maintained their adjusted profit forecasts for the full-year, telling investors to expect between £135m and £140m.