Crest Nicholson warns over rising borrowing costs as profit shrinks

Housebuilder Crest Nicholson has reported shrinking sales and profits amid “rapidly” falling consumer confidence and rising borrowing costs, following the September mini-budget.

The company called on the UK Government to better support budding homeowners facing higher mortgage rates.

Its revenue fell by more than a fifth to £282.7 million in the six months to the end of April, from £364.3 million the previous year.

The decline reflected economic uncertainty and softer demand for homes weighing on the housing market, the builder said.

The firm saw its adjusted pre-tax profit more than halve from £52.5 million to £20.9 million this year, which it said was worsened by cost inflation affecting construction.

The level of build cost inflation has remained close to 10% over the period, Crest said, although there are signs of costs easing and suppliers beginning to offer reduced prices.

A slowdown in construction work has also helped ease materials shortages felt last year, post-pandemic and worsened by the war in Ukraine.

Crest said the average number of properties it sold a week fell to 48 from 58 the same time last year.

The firm said that the second half of its financial year will be more stable and “conducive to moving home”, adding it has a good pipeline of growth in the land market.

But it warned that if interest rates remain elevated, it will start to affect buyer confidence again.

Peter Truscott, Crest’s chief executive, said: “The economic case for buying a home therefore remains compelling, but for many first-time buyers the higher cost of borrowing and the cessation of Help to Buy are prohibitive to realising this ambition.

“If interest rates continue to rise, and remain elevated for a sustained period of time, this will undoubtedly exacerbate this issue even further and start to impact demand and confidence again.

“We continue to call on Government to recognise this challenge and provide further support to these potential homeowners.”