Builder Crest Nicholson has reported a fall in pre-tax profits and warned of a slowdown in the property market if interest rates continue to rise.
The company posted an adjusted pre-tax profit of £20.9m in the six months to April 30, down 60% on the same period a year earlier, while revenue were down by more than a fifth to £283m.
Home completions fell from 1,096 to 894, although median sales prices remained robust.
The firm said the figures reflected the turbulence of last September’s mini-budget, which caused economic uncertainty and shook confidence in the housing sector.
Chief executive Peter Truscott said: “The rapid fall in consumer confidence and rising interest rates translated immediately into softer demand in the housing market,” he added. that despite the economic case for home ownership, the rising cost of borrowing and the end of Help to Buy were proving “prohibitive” for many first-time buyers.
“If interest rates continue to rise and stay high for a sustained period of time, that will certainly exacerbate this problem and start to affect demand and confidence again,” Truscott said, calling on the government to give more support for potential owners. .
Despite this, Truscott said, “At the time [of the mini-budget] we pointed out that with a package of sensible measures to restore economic stability and confidence, the market would remain resilient and this has proved to be the case. As we traded through the period, confidence started to return and this has been reflected in our trading metrics, which have improved sequentially over the period.”
Unemployment remained low and mortgage availability good, albeit at more expensive rates, he said, while a lack of housing supply continued to support house prices and also drive strong levels of rent inflation.
Earlier this year, the UK’s biggest housebuilder, Barratt, warned of a sharp slowdown in the housing market, blaming rising interest rates and political and economic uncertainty.
Crest Nicholson said its disciplined approach to land acquisition, supported by a strong balance sheet, had enabled it to add several high-quality sites to its portfolio, supporting its expansion plans and positioning the company for future growth.
