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Centenary Quay, Woolston Southampton, Crest Nicholson regeneration
Crest Nicholson expects pre-tax profits to be between £170m and £190m in the year to 31 October. Photograph: Image Creative Partnership Ltd
Crest Nicholson expects pre-tax profits to be between £170m and £190m in the year to 31 October. Photograph: Image Creative Partnership Ltd

Crest Nicholson issues profit warning as house sales in London slow

This article is more than 5 years old

Uncertainty over Brexit puts off buyers in the capital and south-east during autumn

The housebuilder Crest Nicholson has warned that profits will be lower than expected because of slowing sales in London and the south-east, where Brexit uncertainties are putting off buyers in the traditionally strong autumn selling season.

The company said it had not seen the pick-up in demand, with prospective buyers unable to afford a home in the most expensive areas and unwilling to make major spending decisions at a time of heightened political and economic uncertainty.

Crest Nicholson expects pre-tax profits between £170m and £190m in the year to 31 October, lower than the £205m it forecasted in June, and the £207m it achieved in the previous financial year.

“The usual autumn pick-up in sales volumes has not been evident during September and October, with many customers putting off decisions to buy while current political and economic uncertainties persist,” said Stephen Stone, the company’s executive chairman.

Shares in the FTSE 25o firm fell 7% after it said demand for pricier homes above £600,000 had been weaker than expected, with “more aspirational” properties struggling to sell as confidence wanes among discretionary buyers. Shares in other quoted builders, including Berkeley and Persimmon, fell too.

Crest Nicholson has dropped its prices in the most expensive locations of London where affordability is most stretched.

Demand has fallen so sharply that the company has closed its office in London and its remaining sites in the capital are being managed from its offices based in the home counties.

Its fortunes contrasted with the nationwide housebuilder Barratt Developments, which reported a strong start to its financial year in an update before its annual shareholder meeting in London on Wednesday.

“The group has started the new financial year in a strong position, with a good sales rate, healthy forward order book and customer demand supported by an attractive lending environment,” David Thomas, Barratt’s chief executive, said.

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Barratt’s forward sales are up 12.4% compared with the same point last year.

Crest Nicholson’s finance director, Robert Allen, is to leave the company after a short handover period. the group said it was taking a number of steps to improve the performance of the business, including building at a slower rate to reflect weaker sales.

It is expanding in the Chilterns and the Midlands, and focusing on properties priced below £600,000. It is also trialling off-site methods of construction of homes, in a effort to reduce costs and increase efficiencies.

The group said it was still committed to paying a full-year dividend of 33p a share.

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