Housebuilder and land investor MJ Gleeson has upped its full-year expectations as sales rose, and rising house prices offset a surge in building and labour costs.
The company, which focuses on ‘affordable’ homes for first-time buyers, has hit its target of doubling house sales in five years, having shifted 2,000 homes in the year to the end of June, up 10.4 per cent on the year before.
Average selling prices rose by nearly 15 per cent to £167,300, offsetting ‘significant material and labour cost increases experienced across the sector in the period’.
In demand: MJ Gleeson expects strong demand from first-time buyers to continue
Despite the surge in prices, Gleeson claims its homes remain ‘highly affordable’ and generally less expensive than renting.
‘A young working couple on the National Living Wage can afford to buy a home on any of the company’s sites and the cost of buying a typical Gleeson home remains less than the cost of renting,’ the group said.
It also argues that its homes, which are ‘well-insulated and energy-efficient’, will become even more desirable at a time of high inflation and rising interest rates.
Pent-up demand from first-time buyers is set to keep driving growth, according to chief executive James Thomson, who said the group had started the new year ‘in a strong position’.
‘Notwithstanding the ongoing congestion in the planning system and the wider macro-economic environment, the Board believes that the scale of pent-up demand for low-cost homes will continue to drive significant growth into 2023 and beyond,’ he added.
The group said its pipeline increased 6 per cent to 16,814 plots on 160 sites at the end of June.
MJ Gleeson shares jumped over 7 per cent shortly after the open, but had lost some of those gains to trade 2 per cent higher at 524p by 9am. They remain around 40 per cent lower than a year ago.
The group, which also has a land investing division, =sold six sites during the period with the potential to deliver 1,443 plots for housing development.
But ongoing planning delays have continued to affect the business, it said, with some 16 sites awaiting a planning decision, one more than last year.
‘Following such a strong performance, the Board expects the results for the financial year to 30 June 2022 to be significantly ahead of market expectations and remains confident in the Group’s future prospects,’ it concluded.
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