November 22, 2017 / 7:23 AM / a year ago

Countryside sees strong trading in housing market

(Reuters) - Countryside Properties (CSPC.L) said trading in Britain’s housing market was robust, as partnerships with local authorities and a focus on London’s outer boroughs helped the property developer shrug off sector-wide concerns.

Countryside, which regenerates public land and builds houses on its own plots, also said it was seeing strong customer demand, favourable mortgage lending conditions and “good political support”.

The developer’s comments are in sharp contrast to those from peers Crest Nicholson (CRST.L), Barratt Developments Plc (BDEV.L) and Persimmon (PSN.L), which have flagged Brexit-related barriers to new house construction and reported weak new home sales.

With concerns over Brexit weighing, the Royal Institution of Chartered Surveyors has said house prices in Britain are no longer rising. In London, they are falling at the fastest pace since 2009, it added.

Trading was also aided by low interest rates and increased demand from first-time buyers due to the government’s Help to Buy scheme, Countrywide CEO Ian Sutcliffe told Reuters.

“Our partnerships business is significantly different to everybody else and hence our different tone to everybody else,” Sutcliffe said.

“The principal difference ... is we’re working in conjunction with local authorities and housing associations to deliver a mixed tenure of properties.”

He said Countryside, which mainly operates outside central London, had not seen an impact on its production from Brexit.

The partnership business, which regenerates public sector brownfields and local authority estates, has insulated the company from a slowdown in the private for-sale market.

“It is a low capital model, but a really strong model for working with local authorities to grow,” Sutcliffe added.

Home completions in the partnership business jumped 17 percent to 2,192 units in the year, accounting for two-thirds of completions.

Total completions were up 28 percent at 3,389 units for the year ended Sept. 30, while its private forward order book jumped 8 percent to 242.4 million pounds.

“Countryside’s key differentiation remains its Partnerships business, which offers a highly attractive risk/return profile,” said Barclays analysts, who have an “Equal Weight” rating on the stock.

“Ahead of today’s much anticipated Autumn Budget, the company appears well placed to benefit from a focus on affordable housing and/or the private rental sector,” the analysts said.

Chancellor Philip Hammond will use the budget later in the day to announce plans to build 300,000 homes every year, according to the Sunday Times and the BBC.

“We’ll have to see what comes out in the announcement this afternoon, but it’s nice to see it at the top of the government’s agenda,” Sutcliffe said.

Countryside’s shares were up 1.4 percent at 344 pence at 1022 GMT.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair and Saumyadeb Chakrabarty

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