London: UK-BASED homebuilders expect more headwinds this year despite an improving inflationary environment and stabilising interest rates, outlooks from Crest Nicholson Holdings, Henry Boot and Watkin Jones show.
Henry Boot expects profitability for 2024 to be significantly below current market consensus of £37.2 million (S$63.4 million) as it anticipates another difficult year ahead, it said. “The group is well positioned to benefit when our end markets recover. However, we expect there will be a lag in performance due to the time it takes for projects and sales to complete,” the company added.
The homebuilder expects sales rates at its premium division, Stonebridge Homes, to continue improving, though it is conservative with estimates of completions for 2024 and predicts that a recovery in residential sales will be more weighted to 2025.
Crest Nicholson reported “disappointing” revenue of £657.5 million, a 28 per cent drop from a year earlier, citing ongoing weakness in the housing market.
Medium-term prospects for the sector remain positive given the structural under-supply of housing and the “encouraging” reduction in mortgage rates, which has led to an increase in customer activity despite the seasonal lull, the company said. However the challenging planning environment is likely to slow volume growth in the sector, CEO Peter Truscott added.
Watkin Jones scrapped its final dividend, citing the uncertain market backdrop, after posting a full-year adjusted pretax loss that missed estimates of a modest profit. The developer also sees a “gradually” improving outlook supported by the continuing moderation in build-cost inflation.
This cautious outlook is shared across the homebuilding sector, though some companies are more optimistic. Taylor Wimpey said earlier this month it had seen “good levels” of inquiries so far in 2024, while Persimmon said its weekly sales rate rose in the final quarter of 2023, a sign that slowly declining mortgage rates are relieving the pressure on homebuilders.
“With a path to lower inflation and improved interest rates, while there will undoubtedly be bumps along the way, the economy and our markets have turned a corner, but we expect our results for 2024 to be impacted by these factors,” Henry Boot’s CEO Tim Roberts wrote.