Crest Nicholson Holdings Plc has slashed its full-year profit guidance as trading conditions for the UK housing market continue to worsen.
The housebuilder said that continued economic uncertainty is deterring prospective homeowners, noting that transaction levels across the industry have declined in recent weeks. Crest now expects its adjusted profit before tax to be around £50 million ($63.6 million), down from its previous estimate of £73.7 million, according to a statement Monday.
UK households are facing an avalanche of cost pressures triggered by pricey mortgages and the worst cost-of-living crisis in a generation. That’s led to a flurry of downbeat earnings reports from the nation’s biggest developers, with Bellway Plc and Persimmon Plc warning of job cuts this month in the face of weak demand for new homes.
Crest fell as much as 14.9% in early morning London trading and was down 9.18% at 10:02 a.m.
Read more: Persimmon Cuts Hundreds of Jobs as UK Mortgage Pain Hits Demand
Crest said it was negotiating several bulk deals in a bid to support volume delivery in coming years. The company said that while pricing remains “resilient,” the end of the Help to Buy program is making it additionally challenging for first-time buyers to get on the housing ladder.
Still, the company said it was confident in the medium-term outlook, thanks to expectations of an eventual drop in inflation and mortgage rates.
Investors are now looking to the autumn selling season to see how UK homebuilders will perform, according to Investec analyst Aynsley Lammin. That’s when the sector’s resilience or weakness in the face of mortgage increases will become clearer.
Author: Chloé Meley, Maggie Shiltagh and Damian Shepherd
