Crest Nicholson plans to shift away from low-margin homes after slump in profit

The company revealed it is aiming to 'trade out' of lower margin sites after issuing a profit warning due to a high percentage of the homes built this year being categorised as affordable

Crest Nicholson, the housebuilder, has announced plans to shift its focus away from low-margin homes, such as affordable housing, in an attempt to counteract a dip in profits.

The company revealed it is aiming to "trade out" of lower margin sites after issuing a profit warning due to a high percentage of the homes built this year being categorised as affordable. Chief executive Martyn Clark has pledged a "a year of transition" for the firm, stating: "We will focus more on private sales and prioritise value over volume to enhance returns and margins."

Crest Nicholson anticipates that the annual profit for its most recent financial year, which concluded in October, will be at the lower end of previous predictions. Economists have frequently cautioned that there is a shortage of affordable housing in Britain, partly due to the fact that cheaper homes yield less profit for builders.

Labour has expressed its intention to construct 1.5 million new homes within five years, a goal which property group Savills recently warned would not be met without additional grant funding for affordable homes. Crest Nicholson reported that it constructed 1,873 homes this year, with approximately 45% of them classified as affordable or intended for private renters, falling short of the Government’s target of half.

This figure represents a decrease from the 2,020 homes built the previous year, with Crest attributing the drop to "affordability concerns" impacting private open market sales. Mr Clark assumed leadership in June, during a time when competitor Bellway was attempting to acquire the company, which rejected a series of takeover bids.

On Wednesday, he noted that the Bank of England's recent interest rate cuts had improved the economic outlook for Crest, making it "more favourable". Additionally, the Government's efforts to reform the planning system and encourage more building had also positively impacted the overall landscape, he added.