Cancellation rates double at housebuilder

Housebuilder and land promoter, MJ Gleeson, is experiencing a “significant slowdown in demand” with buyer confidence hit by the sharp rise in interest rates and market volatility.

Gleeson Homes cancellation rates which for the first ten weeks of the year were 20% have, over the past six weeks, increased to 41%.

The Sheffield-headquartered business adds net reservation rates have fallen, over the same period, to 0.26 per site per week against 0.42 for the same period last year.

The company is holding its Annual General Meeting later today, which will be addressed by chairman Dermot Gleeson. He said: “In September we announced record revenue and profits for the year to 30 June 2022 and said that we were well-positioned to deliver further profitable growth in the current financial year, notwithstanding the outlook for the broader economy.

“Shareholders will be well-aware that since then much has changed.

“While it is far too early to call a recovery, we were encouraged by yesterday’s Autumn Statement. We would expect to see the re-emergence of buyer confidence as the wider macro volatility subsides.

“What is more, there are good reasons to hope an improving outlook for longer term interest rates will result in greater mortgage availability and affordability.”

He added the outlook for the current financial year is dependent upon the pace of recovery in the housing market. And he said the Board believes Gleeson Homes could deliver volumes anywhere in the range between 1,600 and 2,000 units.

MJ Gleeson notes land continues to be available at sensible prices and its pipeline remains strong.

Gleeson Homes has a land pipeline of 16,484 plots with a gross development value of £3.1bn, of which 8,607 plots are owned and 7,877 are conditionally purchased.

The division currently has 88 active build sites, compared with 82 active build sites this time last year and is actively selling on 68 sites, compared with 60 sites this time last year.

The Gleeson Land division has completed the sale of one site since the start of the financial year. A further four sites are being actively progressed to sale.

The division’s land pipeline currently consists of 71 sites which have the potential to deliver approximately 18,775 plots. The portfolio includes four sites, with the potential to deliver 1,269 homes, which have planning permission or resolution to grant.