Disastrous mini-Budget takes toll on Gleeson sales

Gleeson has said the impact of September’s disastrous mini-Budget has meant that cancellation rates in the past six weeks have doubled to more than 40%.

In a trading update, the housebuilder blamed “market volatility” for the hike, with outgoing Gleeson chairman Dermot Gleeson adding: “The sharp increase in interest rates following the mini-Budget impacted buyer confidence and caused a significant slowdown in demand.”

In the first 10 weeks of its new financial year, which began on 1 July, it said cancellation rates were 20% but this figure soared to 41% since early October.

Net reservation rates have reduced, over the past six weeks, to 0.26 per site per week against 0.42 for the same period last year, the firm added.

Gleeson said the impact of former chancellor Kwasi Kwarteng’s announcement on 23 September meant the number of homes it sells this year could drop by 20% to 1,600 – down from the 2,000 it sold last year.

And he admitted the upper end of sales this year would be no more than 2,000 meaning numbers would be flat on last year. “For the Group as a whole, the outlook for the current financial year is dependent upon the pace of recovery in the housing market.”

But he said the autumn statement yesterday could mark a turning point in the housing market and draw a line under the turbulence of the past few weeks.

“Whilst it is far too early to call a recovery, we were encouraged by yesterday’s autumn statement.

“We would expect to see the re-emergence of buyer confidence as the wider macro volatility subsides. What is more, there are good reasons to hope that an improving outlook for longer term interest rates will result in greater mortgage availability and affordability.”

The firm’s average selling price on new reservations since the start of the financial year was £186,500, an underlying 9% higher than the same period last year.

But Gleeson, who steps down at the end of this year after first joining the board in 1975, said: “We are now seeing interest from customers who might previously have considered a more expensive property built by another developer but who, in the current environment, are attracted by Gleeson’s more affordable price points.”

Gleeson, which last year posted improved operating profit and turnover, said it would next give an update on 13 January.

Yesterday, Building revealed that Watkin Jones, which specialises in built-to-rent and student housing, had begun a consultation with staff over a redundancy programme which is expected to see 10% of employees, around 40 people, leave the company in the next few weeks with the firm blaming the fallout from the mini-Budget debacle for the move.