Low cost housebuilder Gleeson has downgraded profit expectations, saying that a recent market recovery has not been enough to counter a year of headwinds.
The Sheffield-based developer said increased build costs, flat selling prices, the use of sales incentives and several bulk sale transactions had a cumulative impact on its gross margin. And despite an uptick in the wider market, it told shareholders that gross margin for its Gleeson Homes business will be about 1% lower than previously expected.
Analysts had previously suggested the wider MJ Gleeson business could generate pre-tax profits of £28m in the 2025 financial year, compared with £24.8m last year. A planned sale of one of Gleeson Homes' larger land holdings in East Yorkshire had been expected to contribute to profits but the deal is now said to be unlikely, meaning operating profit expectations for the division are expected to be 15-20% below current expectations.
Gleeson told shareholders: "Looking ahead, a number of factors will continue to impact Gleeson Homes into FY2026, including planning delays which will see the business selling from fewer sites than previously forecast. Gleeson Homes' gross margin in FY2026 is also expected to be circa 1% lower than market expectations.
"Gleeson Land has completed three transactions to date and is continuing work on a further seven disposals anticipated to complete before the year end."
Gleeson reported what it said was "robust" performance in the first half of the year, though operating profit across the Gleeson Homes business fell 10.8% to £9.1m and 290% in the Gleeson Land business, which swung to an operating loss of £1.9m. Overall group operating profit was down 42% to £5.1m.
At the time, bosses had pointed to encouraging signs of recovery with net reservation rates up 45% to 0.77 in the four weeks the end of January 2025.
New data shows house price growth accelerated in May, amid “supportive” underlying conditions for home buyers. According to Nationwide's House Price Index, the typical Ƶ house price increased by 3.5% annually in May, compared with 3.4% in April.
Robert Gardner, Nationwide’s chief economist, said: “Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the Ƶ remain supportive.”
