Soaring mortgage costs hit sales at housebuilder

Housebuilder MJ Gleeson completed the sale of 894 homes during the half-year ended 31 December 2022, 4.1% fewer than the half-year to 31 December 2021.

The Sheffield-headquartered business explains this reflects the weaker market and considerably higher mortgage costs as a result of the Government’s mini-budget in September 2022.

Despite this, MJ Gleeson notes that selling prices have remained stable.

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.

MJ Gleeson adds it is continuing to successfully secure land, while tightly managing working capital on both land purchases and new build sites until the pace of the market’s recovery becomes clearer.

The company’s net cash balances at 31 December 2022 were £13.5m (31 December 2021: £38.2m).

Gleeson Homes acquired three sites during the period and opened three new build sites. The division had 87 active build sites (31 December 2021: 83) and was actively selling on 68 sites (31 December 2021: 60) and the company expects to be selling on around 66 sites by 30 June 2023.

Gleeson Homes enters the second half of the financial year with a forward order book of 319 plots (31 December 2021: 616 plots).

But a spokesman for the business said: “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 2022, and the need for low-cost, high-quality homes remains acute.

“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.”