Low cost housebuilder MJ Gleeson has become the latest construction firm to highlight the slump in the housing market, but says signs of recovery are on the way.
The Sheffield firm has released a trading update for the second half of 2023 in which its number of sale completions fell 14% to 769. The company also noted higher costs on some of its existing building sites and said its margins would be squeezed by between 1.5% and 2%.
But it said it currently had significantly more forward orders than at the same time last year - 586 compared to 319 - and was expecting to see demand increase in what was normally the busier time for its market.
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The company said: “Against the backdrop of stabilising interest rates the board anticipates a recovery in demand for low-cost housing in the seasonally busier selling period over the coming weeks and months. Gleeson Homes also continues to negotiate further multi-unit sales and expects to enter into agreements over the coming months for delivery of homes in the current and next financial year.”
Gleeson said that it had incurred additional costs on a number of older sites, including sales incentives. Investment in new sites had increased net debt from £5.2m to £18.7m but it said the impact of that spending would be seen over the next two years. A number of other housebuilders - including Barratt, Bellway and Persimmon - have also noted a slowdown in the housing market in recent months as higher interest rates and the high cost-of-living have deterred buyers.
Data released last week suggested the long-running woes for UK builders continued in December, though there were some signs of the sector coming off recent lows. Construction companies reported that a recent slump in housebuilding continued last month, but firms were hopeful that 2024 might bring better conditions, according to the latest S&P Global/CIPS Construction purchasing managers’ index.
