British housebuilder Crest Nicholson has issued its third profit warning since April, announcing it now expects an operating loss of approximately £10 million for the year ending 31 October, reversing an earlier forecast of £5 million to £10 million profit.
The Surrey-based company cited “subdued” market conditions during the summer months, with sales rates declining over the past six weeks compared to the first half of the year. Crest will complete between 1,350 and 1,400 homes this year, down from its previous estimate of 1,400 to 1,500 units.
Market pressures impact sales
Chief executive Martyn Clark attributed the downturn to “affordability constraints and competitive pricing” affecting demand. Building material costs remain 3% to 4% higher on average, adding pressure to margins. The company has responded by closing one divisional office and cutting 50 jobs in recent months.
The profit warning follows a pre-tax loss of £35.2 million for the six months ending April. Shares in Crest Nicholson fell more than 10% on Thursday morning following the announcement.
Debt reduction ahead of schedule
Despite operational challenges, the company is reducing borrowings faster than anticipated. Net debt is now expected to reach £70 million to £90 million by the end of October, down from the previously forecast £100 million to £120 million.
Crest has been in negotiations with lenders to renegotiate banking covenants to secure future funding. The company described the talks as constructive but noted “some slippage in the current timetable”, indicating discussions are taking longer than expected.
Broader market context
The UK property market faces headwinds from rising mortgage costs, with swap rates reaching a three-year high this week as global bond market volatility affects lending rates. These challenges are affecting both property transaction timelines and overall market activity.
The difficulties facing housebuilders come as the wider property sector experiences pressure, with concerns mounting about high street decline affecting estate agencies and other property-related businesses.
Clark stated: “While the trading backdrop has remained difficult through the summer, we are making tangible progress on the actions within our control. Although the timing of a broader market recovery remains uncertain, the group is taking the right actions to protect liquidity and improve operational execution.”
The company’s outlook reflects broader uncertainty in the UK housing market, with the timing of any recovery remaining unclear amid persistent affordability challenges and elevated building costs.
