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UPDATE 1-UK builder McCarthy confident for year despite election hit
July 5, 2017 / 9:37 AM / 3 months ago

UPDATE 1-UK builder McCarthy confident for year despite election hit

(Adds CEO comments, share movement, details)

By Noor Zainab Hussain and Esha Vaish

July 5 (Reuters) - McCarthy & Stone, Britain’s biggest builder of homes for retirees, said sales momentum slowed in recent weeks hurt by the uncertainty brought on by the country’s general election, even as it posted a hefty order book of forward sales for the March to June period.

National elections can often dampen demand as buyers put off major purchases, with housebuilder Crest Nicholson cautioning about the impact of election uncertainty.

McCarthy, whose business is slightly different as retirees often sell their houses to move into a McCarthy property, said the current uncertainty in the market could have a modest impact on the timing of conversion of existing reservations into completed sales.

However, the impact has not been as severe as that seen in the aftermath of Britain’s vote to leave the European Union, Chief Executive Clive Fenton told Reuters.

“After the Brexit vote in June last year, we took the decision to pause and reevaluate some of our investments until the impact of the result became clearer. The effect of this was to push back our workflow by about three months,” he said.

“We’ve made no such moves post the general election and are in fact increasing our workflow, almost doubling the amount of sales releases we have next year.”

McCarthy shares were up 1.1 percent at 165.3 pence at 0915 GMT. They have fallen a third since the Brexit vote, which weakened the UK housebuilding market and weighed on McCarthy’s first-half results.

The builder also previously warned of some Brexit impact on current-year growth due to a weak forward order book and a more measured approach to land negotiation.

However, it said on Wednesday it had been making “good progress” in rebuilding its forward order book after the shortfall it experienced following the referendum last year.

The company said its forward order book had grown by 241 million pounds ($311.3 million) since March 1 to July 4, adding that overall reservations were in line with last year and sales indicators were well ahead.

Average selling prices was over 280,000 pounds per unit during the period, up from 265,000 pounds a year earlier, with total forward sales, including legal completions, to date were in line with last year at 659 million pounds.

“The market for high-quality retirement housing remains strong notwithstanding any potential uncertainty as a result of the UK general election outcome,” Fenton said. ($1 = 0.7742 pounds) (Reporting by Noor Zainab Hussain and Esha Vaish in Bengaluru; Editing by Amrutha Gayathri)

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