Profits leap 13% at Crest Nicholson

PROFITS at housebuilder Crest Nicholson beat City expectations, although the average selling price of its homes fell 10% from £239,000 to £210,000.

The company put the fall down to a switch in focus from the highly priced South-East to the Midlands and an increase in the number of affordable homes it built. Crest sold 1,055 houses in the first half, up 27% on the previous year.

The company also became the latest housebuilder to rule out a property price crash. ?The rate of house price inflation we have seen over the last seven years cannot continue indefinitely and a period of readjustment must inevitably come,‘ chief executive John Callcutt told Reuters. ?At the moment there is no evidence to suggest that readjustment will be anything other than a slowdown in the rate of inflation, rather than the crash that other people have predicted.‘

Profit before tax surged 13% to £36m in the six months to 30 April, beating analysts' consensus forecast of £32.5m. The interim dividend was up 14% to 4p per share, against analyst expectations of 3.8p.

The company also revealed it had bought 2,144 plots, with a development value of just under £370m, in the past six months. The resale potential of its 14,700 plots is now estimated at £2.75bn, up 12% from £2.46bn a year ago. Crest estimates its landbank supply to be five years.

Britain's housebuilders have enjoyed a bumper few years as falling interest rates, high employment and a shortage of homes has triggered a surge in demand and prices.

A raft of respected City fund managers have benefited from a prolonged rally in the shares of house prices. Despite the rises, analysts say the sector remains one of the cheapest as a result of concerns the housing bubble may burst.

Crest Nicholson‘s shares rose 1 1/2p to 341p in early trading.