Crest Nicholson lowers profit guidance as inflation, interest rates bite

21st Aug 2023 07:02

(Sharecast News) - UK home builder Crest Nicholson lowered annual profit forecasts after a worsening of the housing market amid rising inflation and interest rates.

The company said it expected annual profits to be around £50m in a "challenging" market, down from prior forecasts of £73m, but predicted a fall in interest and inflation rates over the medium term. Shares in the company slumped almost 8% and hit others in the sector.

"Against a backdrop of persistently high inflation and rising interest rates, trading conditions for the housing market have worsened during the summer of this year," the company said on Monday.

"While pricing has remained resilient in a market with limited supply and few distressed sellers, the economic uncertainty is deterring prospective home movers."

Crest Nicholson said higher borrowing costs for those looking to upgrade homes or with low levels of equity - notably first-time buyers - "has become significantly more expensive with no government support now in place to cushion this impact after the controversial "help to buy" scheme ended last year.

Reporting by Frank Prenesti for Sharecast.com