Gleeson sees strong demand for affordable housing in the North

The group reported strong demand across all its sites as more home buyers look to buy houses in former pit villages and other deprived areas in the North of England.

The Sheffield-based firm​ ​specialises in building houses on land that no-one else wants to buy and turning the developments into desirable areas that rejuvenate the local economy.

Gleeson's CEO​ ​Jolyon Harrison​ ​said the​ group is on track to deliver at least 1,000 new homes this year.

"Demand is very, very strong indeed," he said.

"We are opening more sites, word is getting round about us and there are 21,000 mortgage products out there. Lenders are desperate to lend."

​We said that recent openings across the north have seen queues forming from 5am for an 11am opening.

"We are answering a demand. People want to become home owners and we build nice homes," he said.

"It's totally affordable. A two bed semi is £100,000. With Help to Buy and a mortgage over 25 years, the payment is £52 a week​. That compares with council house rent of £80 per week."

The group is keen to expand into other parts of the country and is looking at land in East Yorkshire.

"We have a site in Scarborough and we're looking at Bridlington, Hull and Driffield," said Mr Harrison.

"We hope to have an East Yorkshire area office within 18 months."

Mr Harrison said the group has seen little impact from the Brexit vote.

"Most of our customers voted for Brexit, around 60 to 70 per cent voted for it. They are very happy. People are getting on with their lives," he said.

"It doesn't matter what happens with Brexit. It's cheaper to buy one of our houses than rent."

Gleeson said revenue increased 9.4​ ​per cent​ ​to £54.7m​ ​in the six months to December 31 and pre-tax profit rose 1.8 per cent to £11.5m.

Analyst Charlie Campbell at Liberum said: "The key message from Gleeson's first half results is that management is increasingly confident in achieving ambitious growth plans in Homes, and in the pipeline at Strategic Land.

"We have left estimates unchanged, but management's confidence in the outlook is shown by the 44 per cent increase in the dividend, which also reflects the strengthening balance sheet. Gleeson remains a preferred housebuilder. We reiterate 'buy' and raise our target price from 630p to 662p."

Analyst James Tetley at N+1 Singer said: "Gleeson’s interims confirm a positive start to the year, in line with expectations.

"Gleeson Strategic Land finished the period strongly and momentum continues to build at Gleeson Homes. Such is the strength of demand that queues are now regularly forming at new site openings and the reservation rate is up 30 per cent year on year. 12.8 per cent volume growth in the first half is poised to accelerate in the second half with a significant number of site openings targeted by June. We leave our forecasts unchanged but see scope for outperformance if current momentum continues.

"A 44 per cent dividend hike takes the yield to 3.4 per cent, an increasing attraction alongside significant growth potential."