Housebuilders stand to be potential beneficiaries if there is a change of government on 4 July, with the Keynesian idea of new houses a key plank of Labour’s economic plans.
A cut in interest rates leading to lower mortgage costs would be the icing on the cake and, in anticipation, share prices already have been strong this year across the sector, with Crest Nicholson up 17% one of the worst performers.
Crest updates next week and its relative underperformance reflects its own problems.
Build quality issues have already led to a provision of £15 million and potentially more to come with a review of other sites underway.
A new chief executive, Martyn Clark, is in place and Thursday’s update comes just ten days after his arrival.
Wealth platform AJ Bell says the builder has a history of missteps and the disappointing trading update back in March, when the building defects came to light, just reinforced its accident-prone reputation.
The March update pointed to sales per outlet per week of 0.44 for the October to March period, albeit with an improving trend.
“Management is targeting 1,800 to 2,000 completions for the year, split one-third, two-thirds across the first and second half, compared to 2,020 last year, and expects prices to be stable around last year’s average of £406,000.
“In the first half a year ago, Crest Nicholson recorded pre-tax income of £28 million and for the whole year to October 2024 analysts have pencilled in £41 million against £23 million last year (which featured £18 million in exceptional charges and provisions).”
AJ Bell also expects a hefty dividend cut in line with the 2.5 times earnings cover policy.