Uncertainty is a killer in the housing market and not even Yorkshire’s finest housebuilders are Brexit-proof - Ros Snowdon

Gleeson specialises in affordable housing
Gleeson specialises in affordable housing
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The housebuilding sector has proved remarkably resilient during the political and economic mayhem of the past few years.

Yorkshire firms have put in a strong performance - from big beast Persimmon to smaller, niche player MJ Gleeson.

York-based, FTSE 100 housebuilder Persimmon recently said it is making good progress on improving customer satisfaction levels following a decision to slow down property sales in order to improve quality and service.

The firm said customer satisfaction is now above the 79 per cent level recorded at the last annual measurement date in 2018, which means it is now above the level required to reach the sector’s four-star rating.

Persimmon reported a 1 per cent fall in pre-tax profit to £509m in the six months to June 30 as the number of new homes sold slowed to 7,584 compared with 8,072 last year as a result of the slower sales pace.

The group is keen to get over a public row over complaints about the quality of its homes.

It launched a review of its business practices in April and decided to push back the timing of handovers to ensure houses were checked more thoroughly.

Persimmon believes it is well placed if there is more Brexit upheaval as it is enjoying high employment levels, low interest rates and its prices are at the more affordable end of the market.

The firm has said it is in a “good position” for Brexit.

At the other end of the market, low-cost housebuilder MJ Gleeson announced a strong annual performance last month.

The Sheffield-based firm said that despite the uncertainties caused by Brexit, demand for its homes is extremely strong. It added that Gleeson Homes is well on track to deliver its milestone target of doubling annual completions to 2,000 units by 2022.

The group said it is in the best part of the market - selling to young, first time buyers on low incomes.

Gleeson announced an 11 per cent jump in pre-tax profits to £41m in the year to June 30 and an 8 per cent rise in the dividend.

So while these two firms appear to be managing Brexit as well as they can, analyst Robin Hardy at Shore Capital warned that uncertainty is a killer in the housing market and after the second vote in Parliament on Tuesday night, we now have it now in spades.

A likely Brexit delay past the end of the calendar year and the growing risk of a General Election may persuade potential buyers to defer until the start (or later) of 2020.

Mr Hardy said this leaves all housebuilders with a potential hole in their sales, either this year or it could leave order books short for next year.

The only saving grace for the housing market is that both potential buyers and potential sellers have evaporated at the same time, meaning that the market has not (yet at least) lurched towards being either a buyers’ (inflationary) market or a sellers’ (deflationary) climate.

Mr Hardy said housebuilders have surged on the back of the elimination of a no-deal Brexit - although this still seems to be a risk for the end of 2020 - and on the hope that a “sugar rush” Budget will soon come and cut Stamp Duty.

He warned that if we are rolling now towards a General Election we may, for now at least, get no Brexit relief nor a sugar rush Budget.

His advice to investors is that the sector remains very volatile and investors should take a safety first approach and bank some of the gains from the last six weeks.

Not even Yorkshire’s finest housebuilders are Brexit-proof.