‘Weaker’ market conditions result in drop in sales for housebuilder MJ Gleeson

The group said it has now swung into a net debt of £18.7m for the half year, compared to net cash of £5.2 million for the six months ending in June of 2023.

The firm said this reflects its significant investment in bringing forward a higher proportion of home starts before June 2023.

MJ Gleeson noted that it now also expects full year gross margins to fall below expectations.

The company’s announcement said: “Additional costs relating to a number of older sites, along with the cumulative impact of current market conditions including extended site durations, sales incentives and multi-unit sales, are now expected to result in full year gross margins falling below expectations by circa 1.5 per cent to 2 per cent.”

Gleeson Land completed the sale of one site during the half year to 31 December 2023, compared to the three sites sold in the same period the year prior.

The firm noted, however, that it had currently commenced marketing a further four sites.

The company said that it expects a recovery in demand for housing over the next few months, adding: “Against the backdrop of stabilising interest rates the board anticipates a recovery in demand for low-cost housing in the seasonally busier selling period over the coming weeks and months.

“Gleeson Homes also continues to negotiate further multi-unit sales and expects to enter into agreements over the coming months for delivery of homes in the current and next financial year.”

Net reservation rates for the group during the half-year period were 0.41 per site per week, up from 0.36 per site per week in the second half of the 2022.

The announcement comes ahead of MJ Gleeson posting its financial results for the six month period, which are expected to be released on 15 February.

In its most recent annual results for the year ending 30 June 2023, MJ Gleason announced that its pre-tax profits had fallen from £55.5m to £31.5m.

The company said at the time that a “disastrous” mini-budget in September of 2022, combined with the withdrawal of the Help to Buy scheme had led to a rapid slowdown in the housing market and a significant fall in demand in the second quarter of the financial year.

Mortgage rates rose in September 2022 following the mini-budget under then prime minister Liz Truss and chancellor Kwasi Kwarteng, which the company said it believed had l ed to a shift in the types of people looking to purchase houses.

The business noted that reservations from first-time buyers in the second half of 2022 had accounted for around 50 per cent of open market reservations, compared to the 80 per cent it has typically seen before.