Crest plunge into the red sounds alarm on housing

A NEW alarm for the housebuilding sector was sounded today as one of the biggest players Crest Nicholson plunged into loss, slashed its dividend, and said confidence was being hit by the delay in interest rate cuts and pre-election uncertainty.

- Daniel O'Boyle

Shares in the FTSE 250 firm fell by as much as 12% after it revealed it made a £30.9 million loss in the six months to 30 April, as revenue fell by 9%. The interim dividend has been cut by 82% to just 1p. Completions were down by 12% to 794.

After rising interest rates hit the sector in 2023, housebuilders had hoped to see an improvement in demand starting in the middle of this year, as rates started to come down.

Instead, the expected date of the first interest rate cut has been repeatedly pushed back, with City markets now suggesting it might not come until the autumn. This has pushed mortgage rates back up — with the average price of a two-year fixed-rate deal now near 6%, according to Moneyfacts — and “softened” demand for Crest’s homes.

High wage growth and inflation in the services sector have encouraged the Bank of England to keep its interest rates at 14-year highs.