The rise of working from home since the pandemic hit is boosting sales and profits at one of Britain’s leading housebuilders.
Crest Nicholson (CRST.L) shares soared 15.7% as investors welcomed its latest trading update on Tuesday, with the company promising to restore dividends from its interim results in 2021.
It now expects its adjusted pre-tax earnings for the full year 2020 to be “significantly” higher than consensus forecasts, and to come in “at the upper end” of its previously stated £35-45m ($45-58m) range.
It told investors in a trading statement on Tuesday it had seen a “good sales performance” through the second half of its financial year, with sales “robust” and slightly higher than levels seen just before the first UK lockdown earlier this year.
Forward sales stood at 2,289 homes at the end of October, worth an estimated £480.5m. A year earlier forward sales had been lower, at 2,013 units worth an estimated £378m.
The announcement underlines the mini-boom in Britain’s property market despite the health and economic crisis, and the shifting trends fuelling demand.
Interest in moving home soared earlier this year after the first nationwide lockdown lifted, with estate agents reporting customers hunting for more space, green space and home office potential in less built-up areas. Stamp duty cuts in England and Northern Ireland have fuelled the market even further.
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“The release of pent-up demand, whether due to customers putting off moving because of Brexit uncertainty or subsequent COVID-19 disruption, and the benefits of the stamp duty holiday, have supported near-term confidence levels in the housing market,” said Crest Nicholson’s latest statement.
“We are also seeing evidence of changing customer attitudes and requirements as a result of the pandemic. Expectations that COVID-19 has driven a structural change to the balance of office and home working has featured strongly in customers' reasons for considering a Crest Nicholson home.”
The sustained level of demand months after market restrictions eased has taken some analysts by surprise, however, particularly amid heightened economic uncertainty. Rising unemployment, interest rates, and virus restrictions are expected to rein in the boom, with some economists predicting prices will slump next year.
Peter Truscott, chief executive, said: “The introduction of another national lockdown will undoubtedly bring fresh challenges, but we welcome the Government's support to maintain construction activity and for the housing market to remain open for business.
“Although the macro-economic outlook is uncertain our strategy will remain unchanged. We will maintain our strong focus on delivering operational efficiencies and if our trading becomes significantly disrupted we will act decisively again to protect our enhanced balance sheet.
“However, we expect the housing market to remain resilient to the impacts of COVID-19 and as such we are well positioned to capitalise on that demand, particularly considering our product range and focus in Southern England.”
Crest Nicholson said it would reinstate dividends from its 2021 interim results on a two-and-a-half times cover basis.