Demand for new homes in the UK still exceeds supply

Demand for new homes continues to outstrip supply despite mounting fears about the country’s economy, raising the likelihood that the housing market will cool rather than crash.

According to the Financial Times, Crest Nicholson and Bellway, two of UK’s biggest property developers, were buoyant on their prospects earlier this week, with the former elevating its revenue forecasts for the full year and the latter announcing it was selling houses at a faster pace than in the previous year. This is despite previous warnings from the Bank of England regarding rise in interest rates and the imminent inflation.

It may be recalled that the country’s Central Bank had warned Britons that UK economy could plunge into recession before the end of the year and the Bank’s governor Andrew Bailey had said there was a “narrow path” the Bank of England had to navigate between the dual risks of inflation and recession facing the British economy.

Bellway posted strong sales for the four months from 1 February to 5 June. The Newcastle upon Tyne-based developer aims to complete more than 11,110 homes in the year to the end of July, a 10 percent increase from last year, thanks to the material shortages that are easing.

Homebuilder Crest Nicholson and Bellway report strong sales despite impact of cost inflation.

Crest Nicholson also raised its full-year outlook, despite swinging to an interim loss due to an exceptional charge and indicated that it expected to counter cost inflation with higher selling prices. The company said it expected full-year adjusted pre-tax profit to be £135m - £140m, compared with £45.9m a year before.

"Despite the unpredictable global, economic and political outlook, we remain optimistic about the fundamentals of the UK housing market," said chief executive Peter Truscott. “No one in the construction sector is immune from the current impacts of input cost inflation. However, we are managing to successfully offset this with sales price inflation in a market with strong demand and relatively poor levels of supply”.

In the meantime, Crest Nicholson said it expected full-year adjusted pre-tax profit to be £135m - £140m, compared with £45.9m a year before. The company said it built 1,096 homes in the six months to 30 April, up nearly 8 percent from the same period last year. It made an adjusted profit before tax of £52.5m, up from £36.1m, and raised its full-year forecast to between £135m and £140m.

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