The market has got worse and there is no sign of improvement, the company said.
Just two months ago, Crest Nicholson was expecting a sales-per-outlet-per-week (SPOW) rate of 0.5 to the end of the financial year (31st October). But for the past seven weeks it has been just 0.25 – “representing a progressively deteriorating trend,” it said.
“Against a backdrop of persistently high inflation and rising interest rates, trading conditions for the housing market have worsened during the summer of this year,” Crest Nicholson said.
“While pricing has remained resilient in a market with limited supply and few distressed sellers, the economic uncertainty is deterring prospective home movers. Additional mortgage borrowing for those looking to upgrade or for those with low levels of equity, notably first-time buyers, has become significantly more expensive with no government support (following the end of Help to Buy) now in place to cushion this impact.
“Transaction levels across the industry have therefore weakened further, particularly in recent weeks. Although overall inflation is encouragingly starting to fall, core inflation and wage inflation both remain high with further interest rate rises forecast over the coming months. The group does not therefore expect to see a material improvement in trading conditions before its year end at 31 October 2023.”
The company now expects full-year adjusted profit before tax to be around £50.0m (2022: £137.8m).
Given the slow-down, the newly created East Anglia division is being folded back into the Eastern division with revised boundaries. Yorkshire will remain unaffected given it is now a fully operational division, but investment in it will be revised to reflect the market conditions.