Housebuilders warned of further perils this year despite easing mortgage rates boosting demand from buyers.
FTSE 250 developer Crest Nicholson, which yesterday reported a 70pc drop in profits for last year, said it was ‘too early to gauge customer behaviour’ although it has seen an uptick in enquiries.
The Surrey-based construction group, which also announced the departure of its chief executive after five years, said earnings plunged from £137.8million to £41.4million in the year to the end of October.
Crest Nicholson, which sold 714 fewer homes in 2023 than the previous year, last week issued its third profit warning in six months.
Meanwhile Henry Boot, the 138-year-old housebuilder, said in a trading update that profits for this year will be ‘significantly lower’ than expectations.
Mortgage pressure: FTSE 250 developer Crest Nicholson said it was ‘too early to gauge customer behaviour’ although it has seen an uptick in enquiries
And developer Watkin Jones reported it swung to a loss last year, warning that ‘conditions remain difficult’.
Potential buyers have been put off by high borrowing costs, with interest rates at a 15-year-high of 5.25 per cent.
But lenders have started to slash mortgage costs amid expectations that the Bank of England will cut interest rates this year.
However, developers expect a difficult year for the housing market.
Victoria Scholar, head of investment at broker Interactive Investor, said: ‘The dynamics which have punished the sector in recent years look set to shift this year. However, it could still be a bumpy ride ahead.’
Crest Nicholson boss Peter Truscott, who will be replaced by Persimmon chief commercial officer Martyn Clark this year, said: ‘Recently there has been some positive macro trends with inflation and mortgage rates falling, which bode well for the housing sector.
‘Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year.
‘However, we remain mindful of ongoing uncertainties within the broader economy.’
Meanwhile, a spokesman for Henry Boot said 2024 profits would be ‘significantly below’ current market estimates of £37.2million, as it warned of ‘bumps along the way’ to improved market conditions.
The Sheffield-based firm said yesterday the impact from recovery in residential sales won’t be felt until 2025.
Watkin Jones boss Alex Pease said ‘funding conditions remain difficult’ but the ‘outlook is gradually improving’.
The firm swung to a loss before tax of £42.5million in the 12 months ended September 30, compared to profit of £18.4million in the previous year.
