Crest Nicholson sees profits leap by more than half as housing recovery continues

Picture: PA Wire
Picture: PA Wire
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Housebuilder Crest Nicholson said half-year profits jumped by more than half as it benefited from the recovering housing market.

The Surrey-based firm, which focuses on the south of England, said pre-tax profit leapt 52 per cent to £58.3m in the six months to the end of April, due to an improving economic outlook and aided by a clear outcome to the general election.

It said housing completions rose 3 per cent to 1,124 in the period, while the average selling price of its homes jumped 15 per cent to £309,000.

The housing market is enjoying rising volumes and prices underpinned by the Government’s Help to Buy scheme and moves by the Bank of England last summer to ensure lenders more closely monitor the affordability of the mortgages they hand out.

The industry has also benefited from the UK’s improving economy, which is the fastest growing among G7 developed nations.

Crest Nicholson said: “Purchaser confidence is currently high, buoyed by economic recovery, good access to competitive mortgages and rising disposable incomes.

“The clarity of the result from the general election and the policy continuity that is likely to persist as a consequence are also helpful factors.”

It added its forward sales in mid-June stood at £436.4m, 26 per cent ahead of where it was a year ago. The group said “strong underlying fundamentals” meant it was confident of a successful year.

It said it remained on track to grow its full-year revenues towards £1bn by October 2016.

Crest said it had upped targets and was now aiming to build 4,000 homes a year and hit £1.4bn of sales by 2019, reflecting a renewed focus on building homes in London. The group’s previous target had been to build 3,500 homes a year in the longer term.

Chief executive Stephen Stone said: “Improving economic circumstances and a clear outcome in the general election provide a good operating backdrop for the sector and give us confidence to increase our volume target.”

Brokers at Peel Hunt said growth prospects at Crest Nicholson “remain strong”. It said it expects the housebuilder’s full-year adjusted pre-tax profits to lift 31 per cent to £153m.