Crest Nicholson says growing home prices have outweighed rising costs

Housebuilder Crest Nicholson has said higher sales prices are helping to offset the rise in costs associated with the invasion of Ukraine.

The FTSE 250 firm told investors on Tuesday the escalating conflict had caused increasing input cost inflation through rising energy bills and greater disruption to the supply of raw materials.

These costs are expected to grow, but bosses said they were optimistic about the firm’s medium-term prospects due to the demand for new housing outpacing supply.

Offsetting: Crest Nicholson declared that the escalating conflict had caused increasing input cost inflation through rising energy bills and greater disruption to the supply of raw materials 

They added that the group had a robust balance sheet, with net cash climbing by around £110million to more than £250million in the last financial year, and was ‘progressing well’ with its expansion plans.

It comes as the firm revealed that the rebound in home sales had continued to be strong, with its outlets selling an average of 0.98 properties per week in the eight weeks to 21 March.

This compared to 0.80 during the 12 months to 31 October and 0.59 in the year before that, while Crest Nicholson’s order book as of last Friday was also more than 84 per cent forward sold for 2022 fiscal year revenue.

Demand for modern properties has accelerated since the end of the first lockdown in summer 2020 as Britons have looked for more spacious places to live and commuted to work in an office less regularly.

Chancellor Rishi Sunak’s introduction of a stamp duty holiday that raised the threshold at which a homebuyer paid tax on a house in England from £125,000 to £500,000 provided a further boost to market activity.

The surge in home purchases has helped push UK house prices to record levels even as housing transactions have softened following the end of the stamp duty holiday.

Tax break: Chancellor Rishi Sunak’s introduction of a stamp duty holiday that raised the threshold at which a homebuyer paid tax on a house in England boosted home purchases

Figures published yesterday by real estate portal Rightmove showed that the average asking price for newly-listed homes jumped 10.4 per cent to £354,564 in the year to mid-March, the highest increase it had seen in almost eight years.

Rightmove also claimed there were twice as many buyers in the market than active sellers, the largest mismatch between supply and demand that it had noticed for this time of the year.

There are concerns that the growing cost-of-living crisis in the UK, whether through rising gas, petrol and food prices or the increasing cost of buying a home, would disincentivise people from acquiring homes.

Crest Nicholson acknowledged that current political and economic uncertainties would create issues but said that the Covid-19 pandemic ‘has demonstrated its effectiveness at managing its supply chain in turbulent times.’

It added: ‘Demand for housing continues to outstrip supply and Crest Nicholson has a clear growth strategy in place to capitalise on these market conditions. 

‘Our operating model is highly efficient and is supported by a strong balance sheet, which will underpin growth in future earnings and provides resilience in times of uncertainty.’

Crest Nicholson shares were up 0.6 per cent to 290.8p during the late afternoon on Tuesday. However, their value has declined 22.5 per cent this year and is yet to recover to its pre-pandemic high.  

This post first appeared on Dailymail.co.uk