Shares in Crest Nicholson have slumped to a record low after the struggling housebuilder warned it would post a loss amid a deepening slump in the property market.
Crest said it now expected to post a loss of £10m for the full year, reversing previous guidance of a £5m to £10m profit.
It also said it would build up to 1,400 homes this year, down from an earlier forecast of as many as 1,500. It marks the company’s third cut to guidance in the last six months.
Crest’s shares dropped by as much as 12pc in early trading to a new record low.
Martyn Clark, chief executive of Crest Nicholson, said the business was making “tangible progress” but that trading had “remained difficult over the summer”.
He said: “Although the timing of a broader market recovery remains uncertain, the group is taking the right actions to protect liquidity and improve operational execution, while positioning the business for recovery when market conditions normalise.”
Crest also warned that crunch talks with its lenders were taking longer than expected, months after the company disclosed it was looking for flexibility over the terms of its debt.
The London-listed housebuilder said it remained in “constructive discussions” with its lenders but that it “anticipates some slippage” in its timetable again.
Crest had delayed publishing its results in July in the hopes of reaching an agreement with the banks, but ended up reporting a £35m loss while warning its discussions remained unresolved.
It has sought to shore up its finances by cutting spending and selling extra land, which has helped cut debt by around £30m. Net debt is expected to stand between £70m and £90m at the end of the financial year.
Bosses said market conditions had been “more subdued than expected”, blaming weaker demand and aggressive pricing by rival housebuilders.
Crest’s difficulties will put further pressure on Labour’s ambition to build 1.5 million homes during this parliament.
Several British housebuilders have been forced to slow their land acquisitions and slash investment, while buyer demand has been hit by rising mortgage rates.
There are fresh fears this week that higher mortgage rates will prolong the pain and put off more buyers from making house purchases.
Long-term borrowing costs have surged following a rise in oil prices, with the UK 10-year gilt yield hitting its highest level since 2007.
On Wednesday, Britain’s five-year swap rates – the interest rates that banks charge each other for borrowing – climbed to their highest level since October 2023.
Analysts have warned that lenders will probably raise fixed-rate mortgage costs over the coming days as a result.
