London’s shaky property market is starting to hit homebuilders
LONDON: The traditional autumn sales boom hasn’t arrived for homebuilder Crest Nicholson Holdings Plc.
Sales for fancier properties in London and its commuter belt in southern England are drying up as high prices, Brexit uncertainty and tax rises make buyers skittish.
Crest Nicholson, which announced yesterday that chief financial officer Robert Allen would step down, has cut its profit forecast, is ramping up bulk sales, selling off land and slowing down building rates to cope with the sluggish market, the company said.
Britain’s housebuilders have enjoyed a long boom since the global financial crisis, supported by generous government incentives, cheap credit and a ready supply of land.
After years of price hikes that have vastly outmatched wage growth, that era is coming to an end as the government raises taxes on landlords and second-home owners while threatening the introduction of a surcharge on overseas buyers.
“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,” Crest Nicholson executive chairman Stephen Stone said in the earnings statement.
Barratt Developments Plc, Britain’s third-largest homebuilder by market value, said that reservation rates had slowed slightly in the period since July compared with the same time a year earlier.
Bellway Plc said its operating margin fell in full-year earnings on Tuesday, the first such decline for the vital metric that the company has reported since 2009.
Short interest in the UK homebuilders has spiked since Prime Minister Theresa May said earlier this month that the government would raise stamp duty on overseas buyers to help pay for homelessness services.
At Barratt, it’s now almost 3.3%, the most in eight years.
In recent weeks, hedge funds had taken some profit off the table at Crest Nicholson, whose shares have plunged 40% this year, with short interest falling from an annual high of 10.7% in July to almost 9.4%. — Bloomberg