MILLER Homes chief executive Chris Endsor has said demand for the kind of mid-market properties it builds remains strong in Scotland amid uncertainty about Brexit but noted the firm has drawn up contingency plans for a no-deal outcome.
Read more: Miller Homes targets dramatic increase in sales in Scotland
After Edinburgh-based Miller unveiled a 15 per cent increase in annual operating profits, to £151.1 million, Mr Endsor said trading conditions remain good.
While it has remained unclear what the outcome of the Brexit saga will mean for consumers, the company has made a strong start to the current year. Sales volumes and prices have been in line with expectations.
“Demand for mid-market homes continues to be strong, underpinned by low interest rates and Government support with Help to Buy extended to 2023,” noted Mr Endsor.
He said Miller remains confident in the resilience of the UK regional housing markets on which it focuses, which include Central Belt Scotland.
Miller has a limited presence in the South East around London, where prices have come under pressure since the Brexit vote.
“We tend to find the further north you go the less people are worried about Brexit, it does not impact much at all on their decision-making process,” noted Mr Endsor.
Miller still sees Scotland as an attractive growth market, with its focus on family housing in areas that are within commuting distance of Glasgow and Edinburgh. The company does not expect the Central Belt market to be weakened as a result of Brexit.
Read more: Miller Homes changes hands in £655m deal
It is well on the way to achieving the target Mr Endsor set in 2017 of increasing its annual sales in Scotland to more than 1,000 homes by 2021.
The company sold 735 homes in Scotland last year, up around 7% from 687 in the preceding year.
The total number of homes sold increased by 14% year on year to 3,170 in 2018 from 2,775.
The group said its average selling price (ASP) increased by 4% last year to £249,000 from £239,000, It did not give a regional breakdown but said all its divisions, including two in England, grew sales volumes and ASP.
Miller highlighted the support provided to regional markets by high employment levels, and the fact wages have started rising faster than inflation for the first time in two years while borrowing costs remain low.
“Like most sectors, housebuilding is not immune to Brexit headwinds but it is re-assuring to note how the sector and our business has performed thus far in spite of the daily speculation surrounding the nature of the UK’s departure from the EU,” observed Mr Endsor.
He added: “A full review has been undertaken by the business to understand the impact of a “No-Deal” Brexit and contingency plans have been drawn up to ensure the impact on material supplies is mitigated.”
Read more: Persimmon signals growth plans for Scotland
However, noting that around 90% of the housebuilding materials Miller Homes uses are made in the UK, Mr Endsor underlined directors’ confidence in its growth prospects.
He said the company is on track to deliver its strategic target of selling 4,000 homes annually by 2021.
With Scotland expected to continue to account for around 25% of sales as Miller Homes grows, the group has been investing in land in the country.
Mr Endsor said it will focus on organic growth in Scotland but could consider acquisitions if suitable opportunities came up.
Other housebuilders have shown confidence in the outlook for the market in Scotland in recent weeks.
Earlier this month Barratt said it planned to build 3,400 homes at 16 sites in Scotland during 2019. The company highlighted continued demand for new homes in Scotland amid demographic changes and a strong economic outlook.
In February Persimmon’s group finance director Mike Killoran said the market in Scotland seemed “quite sound and resilient".
Miller Homes sold 1,199 homes in the North of England in 2018 and 1,236 in the Midlands and Southern England.
The Bridgepoint private equity firm showed faith in the firm’s prospects in August 2017 by acquiring the firm in a £655 million deal from funds managed by US financiers Blackstone.
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