Reporting half year figures, firm says skills, capacity and planning issues key to securing growth
Crest Nicholson has warned that skills shortages could stymie the growth ambitions of the housebuilding sector.
Reporting its half year results, which saw revenues up 3% to £419.7m and operating profit margins flat at 19.1%, the housebuilder said it expected the housing market to remain robust, although the outcome of last week’s general election “may introduce some uncertainty in the short term”.
The market was being underpinned by strong demand with good mortgage access and support from the Help to Buy Scheme, chief executive Stephen Stone said, while “moderate sales inflation should help to maintain affordability in the near term and, while we expect some additional build cost inflation, actions we are taking in the business should help to underpin margins”.
However Stone said that the industry remained subject to severe capacity constraints, including skills shortages.
“Addressing production capacity, clearance of planning conditions and the shortage of skilled labour continue to be the key areas of focus for the sector in terms of securing volume delivery and growth.”
Trading had been in line with management expectations in the first six months of the year, Crest said, while open market average selling prices (excluding PRS) for its houses were up 12% at £418,000. It was on target to build 4,000 homes by 2019, hitting annual revenues of £1.4bn.
Forward sales at mid-June 2017 of £540.4m were 4% up, year-on-year, while forward sales for the full year 2017 including year-to-date completions at mid-June 2017 were 6% ahead of the same period last year.
Noting recent controversy surrounding leaseholds, the firm said its general approach was to sell houses on a freehold basis, with what it called “very few leasehold houses” being sold. “We continually review the terms of ground rents for the sale of leasehold properties and we do not believe that they constitute a material exposure for the group,” it added.
Crest said operating profits had risen 3% to £80.3m, while pre-tax profits were up 5% at £76.2m.