Gleeson confident despite mini-budget slowdown

Low-cost housebuilder MJ Gleeson said it completed the sale of 894 homes during the first half - 4.1% fewer year-on-year.

The London-listed firm put the fall down to a weaker market, and “considerably higher” mortgage costs as a result of the mini-budget in September.

Despite that, selling prices remained stable in the six months ended 31 December.

Cancellation rates reduced during the six weeks to Christmas, with the firm reporting 6.5 plot cancellations per week, compared to 11.5 plot cancellations per week in the previous six weeks to mid-November.

Gross reservations during the “seasonally quieter” six weeks before Christmas were 22.2 per week, 25% lower than the 29.5 gross reservations per week in the same period last year.

“The company is continuing to successfully secure land which meets strict hurdle rates whilst tightly managing working capital on both land purchases and new build sites until the pace of the market's recovery becomes clearer,” the board said in its statement.

Net cash balances as at 31 December stood at £13.5m, down from £38.2m a year earlier.

Gleeson Homes acquired three sites during the period, and opened three new build sites.

The company said the division had 87 active build sites, down from 83 year-on-year, and was actively selling on 68 sites, up from 60, with it expecting to be selling on around 66 sites by 30 June.

Gleeson Land, meanwhile, sold one site during the period.

“The business has had several recent planning successes, and a further three sites are being actively progressed for sale.

“Gleeson Land is continuing to see strong demand for high quality consented land from housebuilders looking beyond the current wider uncertainty in the housing market.”

The company said Gleeson Homes was entering the second half of the financial year with a forward order book of 319 plots, down from 616 year-on-year.

“However, we are cautiously optimistic of a recovery during 2023, due to a number of factors, including that mortgage rates continue to fall from the highs experienced in October, and the need for low-cost, high-quality homes remains acute.

“A couple earning the National Living Wage - which is set to increase by 9.7% on 1 April - can still afford to buy a home on any one of our sites.

“In addition, there continues to be growing interest from new customers who might previously have considered a more expensive property built by another developer but in the current economic environment are attracted by Gleeson's more affordable price points.”

MJ Gleeson said the outturn for the current financial year remained dependent on the pace of recovery in the housing market over the coming months.

The company said it would report its interim results for the six months ended 31 December on 16 February.

At 0902 GMT, shares in MJ Gleeson were up 1.95% at 387.4p.

Reporting by Josh White for Sharecast.com.