Springfield Properties completions and reservations fall

Scottish housebuilder Springfield Properties has said demand across its private housing arm remained ‘stable but subdued’ in the six months to 30 November. 

The group’s net debt was around £94million by 30 November, excluding £8.8million of outstanding proceeds from contracted land sales to be received by the end of the financial year.

But Springfield said it remained on track to meet its target of reducing net bank debt to £55million by 31 May 2024.

The group said buyer demand continued to be affected by higher interest rates, mortgage affordability and ‘reduced homebuyer confidence’, resulting in lower completions and reservations than by the same point a year ago. 

Housing in Scotland: Scottish housebuilder Springfield Properties said demand across its private housing arm remained ‘stable but subdued’

It said: ‘The increase in net bank debt over the six-month period primarily reflects £11million in scheduled deferred payments relating to the Group’s acquisitions of Tulloch Homes and Mactaggart & Mickel Homes and £6million in contracted payments for land. 

‘It also reflects the usual working capital cycle, with work-in-progress at the end of the first half for delivery in the second half of the year.’

In September, the group’s shares fell sharply as it announced plans to stop paying dividends in a bid to tackle its debts. 

In the six months to 30 November, the group entered into two agreements for ‘profitable sales of land’ for total consideration of £9.3million. It said it remained ‘confident of signing other such agreements in the near term’.

Springfield added: ‘The Group continues to carefully manage working capital by commencing to build private homes when they are reserved and maintaining tight control over costs across the Group.’

Build cost inflation continued to fall and is expected to be around 4 per cent for the first half of 2024. 

The group said selling prices across its private home arm remained ‘stable’ during the period. 

Springfield Properties said it was ‘encouraged’ by demand across its affordable housing arm.

It added: ‘The Group has maintained its approach of only pursuing new affordable housing contracts that have a 12-18 month delivery timeframe, which bring lower pricing risk.’

Looking ahead, the group expects results for the first half of 2024 to be in line with management expectations. 

It said: ‘While there remains uncertainty in the near-term market, the Group is confident of meeting market expectations for the year to 31 May 2024, with growth anticipated in H2 over H1 across the business, in line with usual seasonality, and with a significant contribution from land sales.

‘Looking further ahead, the Board is encouraged by the early indications of a return in homebuyer confidence, with inflation reducing and the Bank of England holding interest rates for two consecutive months. 

‘Build cost inflation continues to moderate and there is greater availability of materials and subcontractors. The interest that the Group is receiving in its land bank – and at attractive valuations – reflects the market preparing for an upturn in trading conditions.’ 

Springfield Properties’ shares were up 2.7 per cent or 2.00p to 76.00p on Wednesday morning. 

This post first appeared on Dailymail.co.uk