Cala Homes’ ambition to join the ranks of the UK’s biggest housebuilders looks to be on track as the group achieved record profit and turnover for the fifth consecutive year.
In passing the £700m revenue mark, it has become the latest developer to defy initial investor fears in the wake of the Brexit vote.
Those investors may be private equity houses in Cala’s case, but the concern over how Brexit would impact the housing market will have resonated with its management team, much as it did with shareholders in the likes of Barrett, Persimmon and Taylor Wimpey.
Yet chief executive Alan Brown was understandably bullish about the company’s prospects, noting that the pre-Brexit economic environment had not had any bearing on performance.
In fact, since the Brexit vote housebuilders have, in the main, enjoyed increased completions, record revenue and healthy profits.
With consumer confidence in Scotland low, and economic growth behind even the UK’s overall sluggish performance, there seems to be something paradoxical about how robust the housing market has been. After all, it is not cheap to buy a house.
One look at the market fundamentals provides the answer. Interest rates remain historically low, mortgage availability is strong, and crucially, demand continues to far outweigh supply.
Average first time buyers may now in their thirties, and need a hefty deposit behind them, but the fact new homes cannot be built quick enough to meet demand is positive news for an industry that is only going to expand further as Governments north and south of the Border attempt to rebalance that demand with sufficient supply.
With an average selling price close to £500,000, Cala illustrates that even at the higher end of the market, demand remains strong. This is welcome news, because in the words of chief executive Alan Brown: “without a positive housing market you can’t have a strong economy.”
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