Chief executive Alan Brown delivered a bullish assessment of the company’s prospects and the outlook for the housing market in Scotland as the builder said it was on course to deliver a fifth consecutive year of record profits and turnover. The company said revenue per site rose by six per cent to £251,000 between July 1 and December 31, as reservations increased by 24 per cent.
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Cala, which has a long-term target to lift turnover to £1 billion by 2020, had booked pre-tax profits of £60.1 million on revenue of £587.1m in the year ended June 30.
The company declared that the “fundamentals underpinning” the UK housing market are robust, highlighting positive conditions for mortgage borrowers and a land market that “remains open for business”.
And Mr Brown said the market is as strong in Scotland as it is anywhere else in the UK.
Asked to his assess Cala’s performance in Scotland, Mr Brown said the company was benefiting from the strength of the economy and the “focus” placed on housebuilding by the Scottish Government north of the Border.
Mr Brown, who noted that Cala’s average selling price in Scotland ranges between £360,000 and £400,000, said: “I would say that our Central Belt market is actually more positive than the south-east.
“And equally important is what is happening in Aberdeen. The previous two years have been relatively challenging but in the last nine months we have seen stability in prices up there, so we are now investing again in our Aberdeen business as well.
“All of our Scottish businesses are in really good shape.”
Rising inflation which has followed the weakening of the pound since the Brexit vote has fuelled speculation the Bank of England will lift interest rates from their historic low of 0.25 per cent this year.
Asked whether the prospect of higher rates was a concern to Cala, Mr Brown replied that the company was prepared for rates to go up “sooner rather than later”. But he said the robustness of the mortgage approval process meant it was not a major concern to the housebuilder.
“In many respects it is priced into the market, and I think the tests that are now carried out before you get a mortgage test the effect of huge increases in interest rates before they even lend,” Mr Brown said.
“The whole structure of the mortgage market is completely different [and] more robust, certainly than it was certainly back in 2007.”
He added: “There has to be a concern, but at the moment there is no reason why it should have a significant negative effect.”
Equally Mr Brown said Cala has largely been unaffected by the current weakness of sterling because it buys most of its materials in the UK. And he noted that the prospect of Brexit has not weighed on its performance since the EU referendum in June.
“First of all, there is a significant housing shortage, particularly in England,” he said. “So provided the basic economy of the country as a whole is in a good place, which it is, the housing market would tend to be equally positive.
“When people talk about Brexit they forget that more than 50 per cent of the country voted for it. So more than 50 per cent are all very positive about the fact we voted to come out of Europe. It is only us, more sceptical people perhaps, that worry about these things.
“Nobody knows where we will end up, but more than half of us decided that is where we wanted to go so we might as well get on with it.”
Mr Brown added: “We are on target to deliver our fifth consecutive year of record revenues and profits.
“We have had a really good start to the year, and we are on target to deliver our goal of £1bn of turnover by 2020.”