Rising costs and 鈥榞enerally flat pricing鈥 hit housebuilder

Uk housing site 漏 alamy j2 ndp9

Stagnant house prices and rising costs dented Crest Nicholson鈥檚 first half margins, the group revealed today.

Announcing a dip in pre-tax profits for the six months to the end of April 2018 the Chertsey-based housebuilder said most of its sales outlets had performed well, but higher-priced houses had proved more difficult to sell.

A slow second-hand market for top-end homes was also impacting sales, it added.

First half turnover rose 13% to 拢474m, while pre-tax profit dipped 2% to 拢61m after a hefty 17% hike in cost of sales.

Open market average selling prices, excluding private rented sector units, rose 5% to 拢439,000.

The group said it had seen build cost inflation running at between 3% and 4%, although it believed this was starting to ease.

Operating margins fell from 19.1% last half year to 17.2%, while operating margins for the full year are expected to be around 18%, at the bottom end of the firm鈥檚 18% to 20% guide range.

Chief executive Patrick Bergin said: 鈥淥ur experience of generally flat pricing against a back-drop of continuing build cost inflation has had an adverse impact on our margins and we have taken a number of actions to seek to offset build cost pressures and invest in areas of greater housing affordability.鈥

Crest Nicholson has 鈥渁 strong balance sheet, is securing land at good margins and operates a disciplined business model, generating good returns whilst also contributing to the much-needed supply of housing in the UK鈥, he added.

The firm is closing its central London office on New Fetter Lane and re-opening a South-east division based in Kent.