Cala says rising costs hitting demand for homes
Housebuilder Cala said it saw a “significant” jump in revenue and profit last year but its forward sales position has been weakened by the rising cost of living.
Despite the slowdown Cala said it plans to start work on 29 sites or work phases this year compared to 20 in 2022.
Its optimism going forward coincides with evidence that mortgage demand has begun to pick up as borrowing rates fall.
The firm, now owned by Legal & General, enjoyed a 9% increase in revenue in 2022 to £1.36 billion, while pre-tax profit was up by 27% to a record £169 million.
Home completions were up 4% from 2,904 to 3,027, and the average selling price grew to £492,000 from £462,000 in 2021, as a result of sales price growth and the mix of sites.
Chief executive Kevin Whitaker said: “Cala has delivered an excellent performance across 2022, achieving significant increases in revenue and pre-tax profit.
“This was attained through an increase in new home completions, strong sales price growth and the mix of homes sold during the year.”
But he said there had been a notable slowing of demand as inflationary pressures kicked in.
“We benefited from excellent market conditions in the first nine months of the year. During the final quarter of 2022, the impact of the UK Government’s mini budget on the financial markets directly influenced buyer confidence.
“This has naturally affected sales rates in recent months and has impacted the strength of our forward sales position.
“2023 will be challenging for everyone, due to the increased financial pressures associated with higher living costs and mortgage repayments.”
Cala said it started 2023 with 751 forward private reservations, worth £396m by gross development value. This is down from 994 pre-sold units, worth £488m, a year ago.
Demand for more energy-efficient homes is also expected to drive the business forward.
Mr Whitaker said: “Now more than ever, against the backdrop of increased fuel costs and reduced availability of secondhand homes, new homes offer a great alternative.
“Excellent energy and thermal efficiency help minimise energy use, while facilitators like part exchange support customers through their move.”