Gleeson sees strong growth in Yorkshire as reservations jump in 2020

Gleeson sells low-cost homes in Northern England on brownfield sites
Gleeson sells low-cost homes in Northern England on brownfield sites
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Low-cost housebuilder MJ Gleeson has reported strong growth in its Yorkshire heartland and said January reservations rose 5 per cent on last year and the firm sees no sign of this abating.

The Sheffield-based firm said it was "delighted" with the performance of its homes division, with completions up 17 per cent at 811 units in the group's first half.

Gleeson's new chief executive James Thomson said: "Yorkshire is our biggest region overall. Around 38 per cent of our homes sold in the first half were in Yorkshire. That's 308 of the 811 homes.

"Yorkshire is at the heart of our business. It's also the fastest growing so we were up about 23 per cent in terms of volume in Yorkshire. Out of our 63 sites, 23 of those are in Yorkshire."

He highlighted the success of the group's Carlisle Park and Ferrybridge sites.

"Ferrybridge is a really popular site and we're looking to apply for planning for our third phase there," he said.

"Carlisle Park is a really good site. It is half way between York and Doncaster. It's off the A1 so it's really well connected. Both are really strong sites."

Mr Thomson said he was pleased about the news that the HS2 rail project is going ahead, although he pointed out the importance of greater connectivity in the North.

"I'd personally welcome much greater focus on joining up the various conurbations in the Northern Powerhouse and significant investment in other forms of transport that enable commuters to travel a longer distance," he said.

"If I was Prime Minister, I'd have started with HS3 rather than HS2, but the reality is that so much has been done on HS2 that it's probably the right decision."

The firm, which sells low-cost homes in Northern England on brownfield sites, said land remains available at sensible prices and it will be opening a significant number of new sites shortly.

Pre-tax profits for the six months to December 31 fell 40 per cent to £13m, but this was expected as no land sales were completed in the group's first half.

Gleeson reported a strong start to the second half as three sites have already been sold and four sites are currently in the sales process.

Mr Thomson said there were two reasons for the lack of strategic land sales in the first half.

"Firstly, we always knew it would be a very second half-weighted set of results," he said.

"Secondly, the General Election and the uncertainty in December did slow things down.

"Three deals were completed in January. That has had a knock on effect and as we come into the second half, the business has very strong momentum. From a strategic land perspective, we haven't seen interest this strong for a very long time."

He said the General Election in December has released pent up demand in the strategic land division.

"People were just pausing briefly to see where the outcome was and hence things slipped," he said.

"In some cases, planning committees were deferring planning applications for a month or so."

However, he said customers have not been affected by the political uncertainty over the past three years.

"On the homes side of the business, the General Election has not really had much impact," he said.

"Through the entire period of the EU referendum and all the way up to Brexit, the vast majority of our buyers were relatively unfazed by what was going on around them.

"It's much cheaper to buy than rent."

The average selling price for a Gleeson home rose 1.2 per cent to £128,900 over the first half.

"It's important for us to stay affordable. It's absolutely fundamental to our model and we will never change," said Mr Thomson.

"For the last few years we've probably been subsidising the market. The reality is we are substantially cheaper than any other listed housebuilder. That is due to us buying in areas where housing is affordable and land is cheap."

The group said seven out of eight customers are first time buyers who are highly motivated by the desire to own their own home in areas under-served by traditional housebuilders.

Gleeson announced an interim dividend of 12p per share, an increase of 4.3 per cent over the prior year, which Mr Thomson said was "absolutely in line with our guidance for growth".

Analyst Charlie Campbell at Liberum said: "Gleeson’s low cost homes division continues to see strong demand and faces very limited competition.

"The new CEO has already put in place measures to improve the sustainability of growth and we are confident that growth will continue through the second half and beyond."