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Cancellations double at housebuilder MJ Gleeson following mini-budget

Housebuilder MJ Gleeson has reported that the proportion of purchases customers are cancelling has more than doubled compared to the start of this year.

The company said there had also been a slowdown in demand since the mini-budget.

The number of houses that customers reserved on each of its Gleeson Homes sites dropped from 0.42 a year ago to 0.26 in the past six weeks, it said.

Cancellation rates in the same period jumped to 41% compared to 20% in the first ten weeks of the year.

“In September we announced record revenue and profits for the year to 30 June 2022 and said that we were well-positioned to deliver further profitable growth in the current financial year, notwithstanding the outlook for the broader economy,” said chairman Dermot Gleeson.

“Shareholders will be well aware that since then much has changed.

“The market volatility and sharp increase in interest rates following the mini-budget impacted buyer confidence and caused a significant slowdown in demand.”

Mr Gleeson said the average price that one of his homes has sold for rose by 9% over the past year to £186,500.

He said that the company’s homes still “remain attractive to first time buyers” despite the massive price hikes.

“Furthermore, we are now seeing interest from customers who might previously have considered a more expensive property built by another developer but who, in the current environment, are attracted by Gleeson’s more affordable price points,” Mr Gleeson said.

The company believes it can deliver between 1,600 and 2,000 homes during this financial year.

It is actively building on 88 sites, up by six compared to this time last year, and is selling homes on 68 sites, eight higher than a year ago.

“While it is far too early to call a recovery, we were encouraged by yesterday’s autumn statement,” Mr Gleeson said.

“We would expect to see the re-emergence of buyer confidence as the wider macro volatility subsides.

“What is more, there are good reasons to hope that an improving outlook for longer term interest rates will result in greater mortgage availability and affordability.”