Housebuilder Crest Nicholson said it is likely to build 11 per cent fewer homes in financial year 2024 as macroeconomic challenges dampen hopes of improving market conditions.
The British firm said it expects to build between 1,800 and 2,000 homes in the financial year 2024, compared to the previous year’s figure of 2,020 homes, prompting shares to tumble over eight per cent on Tuesday morning.
It is a tough time for Britain’s housebuilding market, which is battling complex planning regulations, poor quality of homes constructed, high estate management charges and a Bank of England that is reluctant to lower interest rates.
Investors also booed the news that Crest Nicholson has identified defects in construction on four sites completed before 2019. It said remediation work is estimated to cost around £15m over the next three years.
It follows Crest Nicholson’s previous financial woes, including a profit slump in 2023 and multiple profit warnings issued over recent months. Legal issues, such as a potential £13m bill related to a 2021 fire incident, have further added pressure to the company’s coffers.
The company is holding is annual general meeting (AGM) this morning, where shareholders are likely to discuss these developments.
Looking ahead, stable sales prices are expected, and efforts to reduce net debt through lower spending are underway.
Net debt at the end of February is tracking lower than expected, which Crest Nicholson said is due to lower build and land spend. “This trend is expected to continue in the remainder of the financial year,” it added.
Read more
Crest Nicholson’s profit slumps over high-cost ‘legacy sites’ as potential £13m legal bill looms