Housebuilder Crest Nicholson has raised its profit guidance, in a sign of the boost provided by UK government measures to stimulate the housing market.
The FTSE 250 company raised its pre-tax profit guidance to £85m for the full year, 16 per cent higher than consensus estimates of £73.4m.
Crest said the UK housing market, which has experienced a rush of activity since restrictions on sales were lifted in May, would be strengthened by measures outlined in the Budget this month.
Those measures include the extension of the stamp duty holiday, which had originally been set to end this month. The tax break will now be in place in full until the end of June, meaning buyers can save as much as £15,000 in stamp duty, before tapering and being removed at the end of September.
Chancellor Rishi Sunak also announced a mortgage guarantee scheme to encourage banks and building societies to start lending higher loan to value products again.
Average home values have increased 4.1 per cent in the past 12 months, according to the latest house price index from Zoopla, which found that buyer demand jumped 24 per cent in the week following the Budget.
Overall demand is 80 per cent higher compared with the four-year average, Zoopla said, while the supply of new homes is down 13 per cent compared with the 2020 average.
Gráinne Gilmore, Zoopla’s head of research, said a “search for space” was driving demand for family homes and that the housing market had been further boosted by the stamp duty extension and tapering announced in the Budget.
Clyde Lewis, analyst at Peel Hunt, said the Budget measures, while welcome, would do little to address the biggest problems facing the UK’s housing market.
“The economy is still very, very fragile, and housing is an important part of current activity so keeping the market active is sensible,” he added. “But these short-term measures don’t address the main issue, which is the shortage of stock.”
Chris Millington, analyst at Numis, said the housing market “probably didn’t need the shot in the arm” provided by the support because it had been rising since the end of the UK’s first lockdown last spring.
Crest reported a £51m pre-tax loss for the first half of the year as housebuilding slumped following the UK’s initial lockdown but the pain proved to be shortlived.
The company reinstated its dividend in November, having suspended it earlier in the year, posting an adjusted pre-tax profit of £45.9m for the 12 months to 31 October.
Its shares rose more than 3 per cent to 387p in early London trading.