New equity loans welcomed but concerns raised by several housebuilders about impact of five-month wait for scheme to start
MJ Gleeson has become the latest firm to warn of a potential short-term slowdown in the housing market as prospective first-time buyers wait for the launch of Andy Burnham’s Your First Home scheme in April.
The housebuilder and strategic land promoter, in a trading update today, said it welcomed Your First Home as it has “significant potential to assist Gleeson’s target demographic of first-time buyers”.
However, the £410m-turnover business added: “The announcement of the scheme some five months before its launch is likely to postpone demand in the intervening period and to increase cancellations.”
It said it therefore anticipates a weaker first half of the year “with the pace of recovery in the second half increasingly dependent on the efficient and timely introduction of the scheme”.
This echoes comments by Bellway chief executive Jason Honeyman last month who said: “The period ahead of its launch may influence the timing of purchasing decisions among some prospective customers”
Vistry also yesterday said it expects “some first-time buyer uncertainty as customers await further details and implementation of the scheme.”
Gleeson said it’s homes sales rates have improved from the “weak” summer but remain subdued. Its open market net reservation rates for the eight weeks to 1 November were 0.53 per site per week (0.88 including bulk reservations) against 0.52 per site per week (0.93 including bulk reservations) for the comparable period last year.
The firm said it is progressing a number of sites and secured planning permission on three sites but continues to see “adverse committee decisions” following changes in political control after the local elections earlier this year, resulting in more sites having to go to appeal.
Gleeson said it anticipates that profits will be significantly weighted towards the second half of the year with delivery reliant on improvements in buyer confidence.
It said: “We remain positive on the medium-term outlook, strengthened by the prospect of Your First Home, notwithstanding a lack of the visibility on the timing of land sales we would hope for.”
The Your First Home scheme will allow first-time buyers to purchase a home with a 2.5% deposit with an equity loan worth 20% of the purchase price. Local maximum price caps will restrict the homes that can be bought through the scheme.
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