Housebuilder Crest Nicholson has revealed the average price for one of its new build homes has now climbed to £439,000, which is 15.7 times the average annual UK wage of around £28,000.
The company, which focuses on southern England and the Midlands, saw a robust 13 per cent rise in revenues to £473.8million for the six months to April 30 , with the number of homes delivered up by 11 per cent.
Half-year profits fell 2 per cent however as rising costs of production squeezed its margins to 17.2 per cent from 19.1 per cent a year earlier.
Crest Nicholson’s Rosewood development in Colchester, England.
Crest said margins would remain under pressure next year, staying at around 18 per cent in 2018-19 as sales of higher priced properties are set to continue falling.
Patrick Bergin, chief executive of Crest, said: ‘The business continues to increase the number of homes built and carries positive momentum into the second half of 2018, with steady outlet growth and higher forward sales.’
‘Our experience of generally flat pricing against a back-drop of continuing build-cost inflation has, however, had an adverse impact on our margins and we have taken a number of actions to seek to offset build cost pressures and invest in areas of greater housing affordability.’
He added that sales of higher value homes ‘will continue to be impacted by a slow second-hand market and this is likely to restrain volume growth in this segment of the market in the near term, as well as impacting on overall pricing gains’.
Earlier this year, Crest reduced its exposure to central London, where property sales have seen a marked slowdown. It is instead focusing on land in ‘more affordable outer zones’.
Bellway, another housebuilder, also reported today and struck a relatively upbeat tone.
The Newcastle-based housebuilder said pricing was generally ‘firm’, but the rate of growth had eased back in 2018.
It added that customer demand has been hit for large and higher value homes in certain areas, prompting the use of incentives to boost sales.
But the group said it was still on track for substantial full-year earnings growth and record house sales of more than 10,000 units.
Shares in both companies have fallen following the updates, with Crest down 6 per cent and Bellway off 3 per cent in the FTSE 250 Index, while their FTSE 100 counterparts, Barratt Developments and Persimmon, were also in the red on Tuesday.