The housebuilding sector continues to shine despite all the gloom about cost of living pressures and rising interest rates.
There have been signs in recent housing surveys that the market is beginning to cool but updates from Bellway and Crest Nicholson suggest demand is still robust overall.
“Perhaps more impressively, price momentum continues to run ahead of rising costs and, as a result, margins are increasing. This suggests both companies are doing a good job of delivering the kind of homes people are on the hunt for,” Russ Mould, investment director at AJ Bell, said.
“A shift towards hybrid working means those who can afford it are often looking for extra space to accommodate a home office. Supply of new homes remains a long-term issue in the UK and this is helping to support the market.
“Crest Nicholson may have been pushed into a first-half loss by the charge it has taken to deal with fire safety issues on apartment buildings but investors seem to be relieved it is addressing this issue head on, allowing it to move forward.
“After all, it is worth fixing the roof while the sun is shining and before there is a downpour in the form of falling house prices and lower demand.
“With elevated staff and raw material costs the likes of Bellway and Crest Nicholson are exposed to the risks associated with a downturn in the market.
“All they can do is lay strong foundations, including the purchase of land cheaply to improve the economics of future developments, so they can withstand any coming storm and emerge safely on the other side. Notably both Crest Nicholson and Bellway are running with sizeable cash buffers.”
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