The housing market slowdown that followed last year’s Brexit vote hit retirement housebuilder McCarthy & Stone, with lower forward orders pushing profits down 25 per cent in the first half.
Gross selling prices ticked up slightly, from £257,000 to £260,000, but the company, which has 70 per cent of the UK market for specialist retirement properties, had to offer more part exchanges and other incentives to customers to encourage them to move, leaving net prices flat.
Chief executive Clive Fenton said the sales momentum had recovered but the group was still seeing a two-speed market for second-hand home sales, which affect demand for McCarthy & Stone’s new-build flats. Most of its customers are homeowners over 70 looking to downsize who need to sell their existing property before they can move.
“If it is a good, normal property in the sweet spot of £250,000 to £500,000 in a good location with good schools, it is selling really quickly. But if it is £700,000 plus or an unusual property, that is where things are taking a bit longer to move [in the second-hand market],” Mr Fenton said.
Pre-tax profits were £21.8m for the six months to February 28, down from £29m last year. Revenues were £238.2m, down 5 per cent from £250.2m.
In September, the start of the company’s financial year, the forward order book was 13 per cent behind the same time a year earlier. It now stands at £496m, just 1 per cent lower than the £503m a year ago.
In previous updates McCarthy & Stone said orders took until November to normalise after the UK’s vote to leave the EU in June created uncertainty in the housing market. But on Wednesday it said the market was now stable and that leading sales indicators, including sales leads and visitors, were well ahead of the previous year.
The group said it expected a stronger second half, both because the main house selling seasons tended to be spring and summer, and because newer, higher margin stock was starting to come online.
But it also said a lower number of new developments, caused by a pause following the Brexit vote, had an impact in the first half, and would not pick up again until the 2018 financial year.
Anthony Codling, an analyst at Jefferies, said the results were strong given that the group was operating from fewer sites and that the company was otherwise well positioned. “There was a slowdown around the referendum and it is taking time for that to feed through the system, but they are on track to meet expectations,” he added.