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- The Bank of England (BoE) lowered interest rates to 4.75% on November 6
- MJ Gleeson said the rate cut should “reinforce buyer confidence” during the spring.
MJ Gleeson has maintained its full-year guidance despite increasing pressure on margins linked to rising costs and limited house price growth.
The housebuilder has been boosted by monetary easing, with the Bank of England lowering interest rates by a further 25 basis points to 4.75 per cent last week, amid a sustained easing of inflation pressures.
MJ Gleeson told shareholders the rate cut should “reinforce buyer confidence” during the key spring selling season, easing weakness in the UK housing market.
Based on consensus forecasts, analysts expect the Sheffield-based construction company to build 1,862 homes and make £28m in pre-tax profits by the 2025 financial year.
From July to early November, MJ Gleeson reported that its weekly net booking rate increased to 0.56 per site, compared to 0.47 in the same period last year.
However, the group noted that its housing segment was still experiencing pressure on margins, partly due to multi-unit sales, rising construction costs and increased sales incentives.
Outlook: Housebuilder MJ Gleeson still expects its full-year results to be in line with market forecasts following last week’s base rate cut.
MJ Gleeson also noted “limited relief from rising selling prices.”
It plans to sell in a smaller average number of sites than the previous year, although it hopes to open many more points of sale: 27 compared to only four in fiscal year 2024.
But the company said proposed changes the UK government could make to refurbishment planning should “beneficially affect the timing of certain sites”.
The new Labor Government has promised to build 1.5 million new homes over five years, partly by employing more planning officers and developing them on lower quality “grey belt” land.
Only 183,610 new properties were built across the UK in the 12 months to March 2024, down 13 per cent on the previous year, according to recent figures from the Office for National Statistics.
Founded in 1903, MJ Gleeson completed 1,772 new homes in the year ending June, just 49 more than the previous 12 months.
Higher underlying selling prices helped its overall revenue rise 5.2 per cent to £345.3 million, but costs at several legacy sites led to the company’s pre-tax profits falling 21 .3 percent to £24.8 million.
MJ Gleeson actions They were steady at 556p on Friday morning and have gained around 18 per cent over the past year.
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