Retirement housing group halts new projects and freezes recruitment, despite 13% profit increase.
The latest sign of faltering confidence in the UK economy came this week when specialist housebuilder McCarthy & Stone said it had delayed starts on some developments and frozen recruitment.

The Bournemouth-based group said that the retirement housing market had been showing signs of weakening before the terrorist attacks of 11 September. Chief executive Keith Lovelock said: "We don't know what will happen, so we are taking a cautious approach."

He said the Midlands remained strong but that a noticeable slowdown in the South-east had persuaded the company to pull in its horns. It has 1250 units under construction this year, compared with 1500 this time last year.

Lovelock said the group could increase construction again if demand remained strong because it had worked at becoming more flexible over the past four years.

McCarthy & Stone was hit badly in the last recession when it was holding 3000 units just as the market declined and house prices fell. Potential customers were unable to sell their houses for the prices they wanted and pulled out of the market.

McCarthy & Stone's wariness contrasted with the strong set of results it announced last week. Pre-tax profit rose 13% to £60.5m for the year to 31 August and turnover increased £20.5m to £167.5m. Average selling prices increased 11% to £99,000 Sales increased 1% to 1550 but Lovelock said this was a good result as sales had been well down in the first half of the year.

We don’t know what will happen, so we are taking a cautious approach

Keith Lovelock, chief executive, McCarthy & Stone

Staff numbers rose from 674 to 733 with the opening of sales offices around the country, but Lovelock said recruitment had now stopped.

McCarthy & Stone's gloomy view of the housing market contrasted with an upbeat trading statement from volume housebuilder Barratt.

Chairman Frank Eaton told shareholders that demand for its houses was outperforming the market. He said reservations had increased 9% in the first 18 weeks of the financial year compared with the same period last year and advance sales had reached £600m.

He said the events of 11 September had not affected the group's performance and that the average selling price had continued to increase.