Crest Nicholson hikes selling prices 24 percent

Rates of new house completions, sales per week and total forward sales all slowed at Crest Nicholson in the first half of the year compared to its last financial year as the housebuilder drove selling prices higher.

Unit completions in the six months to 30 April of 1,206 were 7% ahead of prior year, down from 8%, with the sales rate per outlet week 4% faster at 1.06, though this is a deliberate slowdown from the rate last year.

Total forward sales of £409m and 1,965 units are up by 22% and 10% respectively on the first half last year, boosted by institutional private rented sector (PRS) sales, which are now running at £85m versus £36m a year ago.

Excluding PRS, forward sales of £324m are 8% higher than the £300m at 30th April 2015, with unit numbers broadly level.

Average selling prices (ASP) were happily up 24% to £387,000 as a successful sign of management's strategy of investing in good quality locations.

FTSE 250-listed Crest Nicholson said reservation values excluding PRS for the first six months of the year reflect higher ASPs and a lower rate of sale per outlet, down 7% to 0.87, than the equivalent period last year, which reflects the strategy of growing ASPs.

"We are continuing to see strong demand for new homes, underpinned by robust employment conditions and good mortgage access," said chief executive Stephen Stone. "The business remains well positioned to continue delivering for all of our stakeholders and is on track to reach its stated target of £1bn of revenues in 2016."

He confirmed that inflation in both sales prices and build cost have shown some signs of moderating, which - combined with rises in real incomes - will help to maintain affordability and support a stable housing market.

The company noted that production capacity, clearance of planning conditions and skills availability are the "critical constraints on volume delivery" and will continue to be key areas of focus for the sector.

Shore Capital analyst Robin Hardy said Crest was the "most strategically ambitious of the larger house builders", with the institutional PRS being "one of the key attractions" of the company as it is "aligning itself to this growing market segment in a way the other larger house builders remain unwilling to accept as necessary".

Shares in Crest Nicholson were up 3.6% to 544p by just after 0900 BST on Monday.