Gleeson sees strong demand for affordable housing in the North

Urban regeneration housebuilder MJ Gleeson has reported strong demand for its homes and said reservations are up more than 40 per cent over the last six months.

Gleeson  sells homes at around 125,000 to the lowest 10 per cent of earners
Gleeson sells homes at around 125,000 to the lowest 10 per cent of earners

The Sheffield-based firm said it has seen “very strong” customer demand in all regions.

At the group’s Annual General Meeting, chairman Dermot Gleeson told shareholders that land is available at sensible prices and the group has a strong pipeline.

Gleeson Homes has a pipeline of 12,490 plots with a gross development value of £1.5bn, of which 7,253 plots are owned and 5,237 are conditionally purchased.

“Build activity has increased in recent months driven by strong demand,” Mr Gleeson told investors.

“The Government’s Help to Buy scheme remains popular with 71 per cent of our customers taking advantage of it so far this financial year while other buyers continue to be attracted by our own bespoke purchaser assistance packages.

“Very strong customer demand in all regions, good mortgage availability and our ability to offer attractive levels of affordability to our customers, means that the outlook for the division remains very positive.”

The division currently has 62 active sites, compared with 58 this time last year.

The board expects Gleeson Homes to record an increase in completions for the second half of 2018 of around 10 per cent and an increase in completions for the year to June 2019 of more than 15 per cent.

“Gleeson Strategic Land continues to experience strong demand for consented land,” Mr Gleeson told shareholders.

Since the start of the financial year the division has completed the sale of three sites with planning permission for a total of 483 plots and is progressing sale negotiations on a further seven sites.

The division’s land pipeline currently consists of 58 sites which have the potential to deliver around 21,789 plots. The portfolio includes nine sites which now have planning permission.

Mr Gleeson said that against this background, the board is confident that full year results will be in line with expectations.

Analyst Charlie Campbell at Liberum said: “The scalability and profitability of the low-cost homes business is being proven in Gleeson Homes’ lengthening track record.

“Demand remains as strong as ever from a market segment that is not well served by other housebuilders. Land remains readily available at low cost, and affordability is not a constraint in its areas. Homes is comfortably on track to double unit sales between 2017 and 2022.

“We believe that Gleeson Homes is a rare Aldi in a Waitrose world. Gleeson Homes sells homes at around £125,000 to the lowest 10 per cent of earners in its geographical areas with very limited competition. Low land costs and disciplined build make it a profitable and cash-generative model.

“Unlike other parts of England, prices in the north are still not much above 2007 levels, which means that affordability is not a constraint.”