Crest Nicholson sees further slowdown in UK housing sector

By Aby Jose Koilparambil

(Reuters) -Crest Nicholson reported a more than 60% slump in half-year profit on Thursday and flagged a further slowdown in the sector, the first warning from a UK housebuilder since recent inflation data fuelled concerns of more interest rate hikes.

Shares in the FTSE 250 company plunged 9.7% to a near two-month low of 225.2 pence by 0934 GMT.

The prospects of further Bank of England rate hikes have stymied hopes of a strong recovery in the housing sector, after a smaller-than-expected decline in April inflation rate forced some lenders to rein in or reprice mortgage offers.

UK house prices are expected to fall further this year due to weakening demand fuelled by high borrowing costs, while British lenders approved fewer home loans in April than the month before, signalling a renewed slowdown in the market.

"Affordability was and still is a challenge for buyers... They are of course nervous and a wait-and-see approach has been adopted by many and this has been particularly true for first-time buyers," said CEO Peter Truscott in an earnings call with analysts.

If interest rates continued to remain elevated for a sustained period of time, it would make market conditions worse and would impact demand and confidence again, Truscott said.

Truscott called on the government to intervene to support first-time buyers, adding that only such a step would make any real difference before the general election, expected in 2024.

AJ Bell investment director Russ Mould in a note said the call for further state support, particularly for first-time purchasers, might feel a bit rich but it reflected the tough outlook for the sector.

Crest Nicholson said weekly sales per outlet stood at 0.54 units during the half-year period, compared with 0.52 units logged for the first 11 weeks of the calendar year.

The builder said adjusted pre-tax profit for the six months ended April 30 came in at 20.9 million pounds ($26 million), while revenue fell 22.4% to 282.7 million pounds.

($1 = 0.8037 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich and Susan Fenton)