A leading UK property developer has maintained its annual construction targets in a recent trading update, showing surprising resilience in the face of economic challenges that have affected Britain's housing market over the past year.
One of Britain’s largest homebuilders has reaffirmed its housing completion forecast for the year, noting that macroeconomic pressures have not significantly impacted their operations or sales performance in recent months.
Steady Performance Despite Market Challenges
In a trading update released on Wednesday, the prominent UK property developer maintained its projection to complete between 10,000 and 10,500 new homes in 2023, unchanged from previous guidance. This steady outlook comes despite persistent challenges in Britain’s property market, including elevated mortgage rates and broader economic uncertainties.
The homebuilder reported that its forward sales position remained robust at £1.54 billion ($1.93 billion) as of April 30, representing 8,243 homes under contract. While this figure marks a slight decrease from the £1.62 billion reported at the same time last year, company officials characterized the performance as resilient given the prevailing market conditions.
“We have been encouraged by the resilience of the housing market and our customers’ continuing interest in purchasing our high quality, energy efficient homes,” stated Dean Finch, the company’s Group Chief Executive.
Pricing Stability and Consumer Confidence
The construction firm noted that pricing has remained relatively stable in recent weeks, with the average selling price of private new homes in its forward order book standing at approximately £278,800, compared to £279,700 reported in the same period last year.
This price stability suggests that despite higher mortgage costs, underlying demand for new housing remains fundamentally sound in many regions across the UK. The company highlighted particular strength in locations where affordability ratios remain favorable.
Customer cancellation rates have also normalized at around 15%, returning to levels typically seen before the mortgage market disruption that followed last autumn’s mini-budget crisis under former Prime Minister Liz Truss’s administration.
Strategic Positioning and Market Adaptation
The property developer emphasized its strategic focus on delivering homes at prices accessible to first-time buyers and young families, segments that continue to demonstrate strong demand despite economic headwinds.
The firm has maintained a disciplined approach to land acquisition, being selective in purchasing new development sites while focusing on maximizing returns from its existing substantial land holdings. This strategy has allowed the company to maintain strong profit margins relative to industry peers.
“We have continued our disciplined approach to land replacement, maintaining our high-quality land holdings while being highly selective in our new land investments,” the company stated in its trading update.
Industry Context and Future Outlook
The positive trading update comes at a time when the broader UK construction sector has faced significant challenges. Rising material costs, labor shortages, and increased regulatory requirements have put pressure on many homebuilders’ margins and construction timelines.
However, the government’s commitment to addressing the UK’s structural housing shortage continues to provide long-term support for the sector. The national target of building 300,000 new homes annually represents a significant opportunity for established developers with strong balance sheets.
Looking ahead, the company expressed cautious optimism about the remainder of 2023, noting that while mortgage rates remain elevated compared to recent years, there are signs of stabilization in the lending market.
“While we remain mindful of ongoing economic uncertainties, the continued strong demand for our homes and the improving mortgage availability provide grounds for optimism as we progress through 2023,” Finch added.
The firm’s shares responded positively to the trading update, rising approximately 2% in early trading on the London Stock Exchange, outperforming the broader FTSE 100 index.