Further interest rate falls will boost housebuilding and commercial development demand, says Henry Boot boss
Further falls in interest rates will boost demand for housebuilding and commercial developments as the year progresses, the CEO of Sheffield construction giant Henry Boot says.
The Bank of England base rate was held at 4.5 per cent last week following a series of recent reductions from a 5.25 per cent peak, and further cuts in the coming months have been predicted.
In its newly-published results for 2024, Henry Boot said previous cuts have improved market sentiment and that a further lowering of rates will “stimulate demand withing both the residential and commercial markets, particularly in the industrial sector”.
Tim Roberts, CEO of Henry Boot, told The Yorkshire Post: “Last year we saw markets recovering in commercial development and housebuilding but volumes are still relatively low. The industry needs a period where prices have stabilised but it also needs more volume.
"If things go according to what most economic forecasters think, then interest rates are still set to come down and that should boost demand.”
Last month, the Bank of England forecast economic growth for 2025 of 0.75 per cent, followed by 1.5 per cent in 2026 and 2027.
Mr Roberts said the wider economy was on track for “steady progress”, which would assist the work of Henry Boot.
"We are generally positive about the future because of the macro-economic outlook and we have been positioning ourselves well.”
The company has recently increased its ownership stake in premium regional housebuilder Stonebridge Homes while also establishing a joint venture called Origin to bring forward industrial and logistics developments.
Henry Boot reported profit before tax at £30.7m for 2024, a figure in line with market expectations but down on the £37.3m recorded in 2023.
Revenue was £328.4m, with its fall on the £359.4m recorded in 2023 attributed to reduced turnover from construction work.
Mr Roberts said: “We should be pleased with what we achieved last year because the markets were slow and we had a very good second half of the year.
"Our profit before tax was in line with market expectations and we’ve maintained our sales of land, developments and homes. But not surprisingly, like nearly every business in the land our cost base has gone up and because of that, our profits have gone down a bit.
"But what we believe is that we are in good markets, our markets are recovering, we think the planning system is getting better and as the planning system improves we will increase our sales and then more than cover the increase in costs. We’ve got a very strong balance sheet and have done some good things in the business.”