CALA Group has declared its confidence in the strength of the Scottish housing market following the Brexit vote, as the housebuilder unveiled a fourth successive year of record profits.
Edinburgh-based CALA said it has seen a significant rise in enquiry levels and reservation rates in the 13 weeks since the UK voted to leave the European Union, with chief executive Alan Brown stating that the “fundamentals of the market” around the UK remain strong.
CALA was reporting an 18 per cent in pre-tax profits to a record £60.1 million for the year ended June 30, on turnover up 15 per cent to £587.1m.
And the company signalled that the momentum has continued into its current financial year, as Mr Brown said the underlying strength of the market had not been affected by the Brexit vote.
Asked to sum up sentiment among house buyers in Scotland, Mr Brown, who noted that CALA is on track to achieve annual turnover of £1 billion by 2020 said: “Very positive, particularly in Scotland actually. Everybody knows that there is a housing shortage. The economy is strong [and] on the back of that the housing market would tend to be strong as well.”
Mr Brown said the market has been able to shrug off any ill effects from the UK’s decision to leave the EU..
“There was a little bit of uncertainty [after the vote],” he said. “Now that has settled down and people have realised that life goes on, and everything seems to be fine.”
Asked whether the Bank of England’s move to cut interest rates to 0.25 per cent, as part of a package of monetary stimulus measures introduced in light of the Brexit vote, he added: “It’s just helped underline the fact that the government wants to make sure the economy stays stable.
“Going through the Brexit process there are bound to be times when there is a little bit of uncertainty.
“So I think what the Bank of England did there was to signal to the market to say, ‘look, we want the UK economy to stay strong. We intend to do whatever is necessary to keep it strong’.
“Allied to that is a very positive message coming out of Westminster that we have a chronic housing shortage, we need to solve it, and the only way to solve it is to build more homes.”
CALA, which is currently building in the Glasgow area, Edinburgh and the Lothians, and Aberdeen, completed 1,151 homes over the period, 16 per cent more than in 2014.
During its last year the company achieved an average price of £436,000 in Scotland, where group finance director Graham Reid noted it builds some 47 per cent of its annual units across three trading divisions. CALA, which operates across five regions in England, achieved an average selling price of £538,000 south of the Border during the period, up six per cent on the prior year.
“As you would expect, it [average price in Scotland] is slightly lower than what we do in England, but it is still significantly different to the bulk in the market,” said Mr Reid.
Asked whether business in Aberdeen has been affected by the prolonged down in the oil and gas industry, Mr Reid said: “It affected us during the year in the way it affected the whole of the local economy and other housebuilders up there. But actually, the pleasing thing is [in] the last six months or so we have stability in pricing there and slightly better sentiment.”
Mr Brown added that it had a “very strong” year on land acquisition had seen it invest £1 billion on sites for building homes. Thirty new sites were contracted last year, which are projected to deliver 2,683 homes.
Mr Brown also declared that the company has the team and infrastructure in place to achieve its £1bn turnover target by 2020, having increased its headcount by 13 per cent to 810 staff.
Meanwhile, Mr Brown said the UK government’s announcement last week that it will bring an end to the Help to Buy mortgage guarantee scheme will have no effect on the market. He said the scheme only applied to mortgages with a loan to value of 95 per cent or more, which does not affect CALA.
“To be honest, I think the take up of that product has been relatively low,” Mr Brown noted. “I can’t see that having any impact on the market whatsoever.”
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