Housebuilder MJ Gleeson raises expectations amid rising prices and strong demand from first-time buyers
- Average sale prices rose by almost 15% to £167,300 in the year to the end of June
- It sold 2,000 homes, a 10.4% increase and achieving its goal of doubling sales in five years
- The group said its pipeline increased by 6% to 16,814 plots across 160 sites.
Home builder and land investor M.J. Gleeson raised its full-year expectations as sales rose and rising home prices offset a surge in construction and labor costs.
The company, which focuses on “affordable” homes for first-time buyers, achieved its goal of doubling home sales over five years, moving 2,000 homes in the year to the end of June, up 10.4% from a year earlier.
Average selling prices rose by almost 15 per cent to £167,300, offsetting “significant increases in the cost of materials and labor that have taken place in the sector over the period”.
Driven by demand: MJ Gleeson expects demand from first-time buyers to remain strong
Despite the jump in prices, Gleeson says his homes remain “very affordable” and generally less expensive than renting.
“A young couple working on the National Living Wage can afford to buy a home on any of the company’s sites, while the cost of buying a typical Gleeson home remains less than the cost of renting,” the group said.
He also claims that his homes, which are “well insulated and energy efficient”, will become even more desirable in a period of high inflation and rising interest rates.
Laid-back demand from first-time buyers will continue to drive growth, according to chief executive James Thomson, who said the group had started the new year in a “strong position”.
“Despite continued congestion in the planning system and in the wider macroeconomic environment, the Council believes that the scale of pent-up demand for affordable homes will continue to support significant growth in 2023 and beyond,” he added.
The group said its pipeline increased 6 percent to 16,814 plots at 160 sites at the end of June.
MJ Gleeson shares jumped more than 7 percent shortly after opening but gave back some of those gains to trade 2 percent higher at 524 pence by 9am. They remain about 40 percent lower than a year ago.
The group, which also has a land investment division, =sold six plots during the period with the potential to deliver 1,443 plots for housing.
But ongoing planning delays continue to affect business, it said, with around 16 sites awaiting a planning decision, one more than last year.
“Following such strong performance, the Board of Directors expects the results for the financial year to 30 June 2022 to be significantly ahead of market expectations and remains confident in the Group’s future prospects,” he concluded.