Crest Nicholson to build fewer low-margin homes after profit hit
The housebuilder warned on earnings after a higher proportion of the homes it built this year were classed as affordable.
Housebuilder Crest Nicholson is to focus less on building low-margin homes, like affordable housing, as it seeks to combat a slump in profits.
The housebuilder said it is trying to “trade out” of lower margin sites, after warning on earnings because a high proportion of the homes it built this year were classed as affordable.
Chief executive Martyn Clark promised “a year of transition” for the company, adding: “We will focus more on private sales and prioritise value over volume to enhance returns and margins.”
Crest Nicholson forecast that annual profit for its most recent financial year, which ended in October, will be at the lower end of previous forecasts.
Economists have long warned that Britain has a lack of affordable housing, partly caused by the fact cheaper homes are less lucrative for builders.
Labour has said it wants to build 1.5 million new homes in five years, a target which real estate group Savills recently warned it would miss without more grant funding for affordable homes.
Crest Nicholson said it built 1,873 homes this year and that about 45% of them were classed as affordable or designed for private renters, less than the Government’s target of half.
The figure is down on the 2,020 homes it built the year before, with Crest citing “affordability concerns” hitting private open market sales.
Mr Clark took the reins in June, during a period in which rival Bellway was trying to buy it, with the company turning down a series of takeover bids.
He suggested on Wednesday that recent cuts to interest rates by the Bank of England had made the economic outlook for Crest “more favourable”.
The Government’s attempts to bring in reforms to the planning system to enable more building had also helped the broader landscape, he said.
