MARKET REPORT: Housebuilder Crest Nicholson rocked as it warns of slowdown

The storm clouds gathering over the housing market darkened as one of Britain’s biggest builders warned of a further slowdown.

Just 24 hours after lender Halifax revealed that prices were falling year-on-year for the first time in more than a decade, Crest Nicholson said rising interest rates are threatening to affect demand and confidence.

The comments came as the FTSE 250 firm reported a 60 per cent slump in half-year profits to £20.9million after revenues fell by more than a fifth to £282.7million. Shares fell 7.1 per cent, or 17.8p, to 231.6p.

Crest built 894 homes in the six months to the end of April, down from 1,096 in the same period last year, but prices ‘remained robust’ amid a shortage of properties.

Chief executive Peter Truscott said the start of the financial year in November, in the wake of the September mini-Budget, saw a downturn in business as mortgage rates spiked, adding: ‘Rapidly falling consumer confidence and rising interest rates immediately translated into softer demand. As we traded through the period, confidence started to return.

‘The economic case for buying a home remains compelling, but for many first-time buyers the higher cost of borrowing and the cessation of Help to Buy are prohibitive. 

If interest rates continue to rise and remain elevated for a sustained period, this will exacerbate this issue even further.’

Construction group Galliford Try was heading in the other direction after it announced plans to return cash to shareholders following the end of a long-running contractual dispute.

The firm is due to receive £26million and, while some will be invested in the business, a ‘substantial’ proportion will be handed to investors via a special dividend of 12p a share in October. The stock rose 7.9 per cent, or 14.6p, to 200p.

It was a nervy session on stock markets around the world as rising government bond yields and news that the eurozone was in recession weighed on sentiment.

The FTSE 100 was down 0.3 per cent, or 24.60 points, to 7599.74, while the FTSE 250 fell 0.2 per cent, or 44.72 points, to 19,107.55.

Vodafone fell 5.5 per cent, or 4.3p, to 74.15p as it closed in on a £15billion merger of its UK operations with Three. 

Stock Watch –  RWS Holdings

RWS Holdings rose 10.7 per cent, or 24.4p, to 251.8p as the translation firm eyed a rise in activity. 

The group, whose chat tool has helped to translate documents between a joint US and South Korean army division, said the ‘softer activity levels and slower decision-making among certain clients’ in the six months to the end of March should improve.

It reiterated forecasts for the year, outlined cost savings and announced a share buyback programme worth up to £50million.

Reports suggest a deal between Vodafone and Three’s Hong Kong owner CK Hutchison could be announced today.

Asset manager M&G recorded £1billion of net inflows n the first quarter as it shrugged off expected redemptions from institutional clients in the wake of the mini-Budget when bond market chaos wreaked havoc on markets. Shares rose 1.4 per cent, or 2.8p, to 201.2p.

Mitie rose 3.2 per cent, or 3.1p, to 99.5p after record full-year revenues of £4.05billion for the 12 months to the end of March – up from £4billion a year earlier as operating profits jumped from £72million to £117million.

Fellow outsourcer Capita struck a £33million deal to sell five software businesses to Advanced AdvT, the investment vehicle that tech tycoon Vin Murria used in an unsuccessful bid to buy M&C Saatchi. 

The companies, which Capita described as ‘non-core’ to operations, generate £35million in annual revenues and £3million profit.

Murria said: ‘We are excited to drive new opportunities and, with a substantial war chest, the business is well placed to execute M&A that is synergistic and accretive.’ AdvT shares were suspended pending further information about the deal. Capita rose 1.6 per cent, or 0.52p, to 33.36p.

Heavy equipment rental firm Ashtead, which trades under the Sunbelt brand, gained 0.8 per cent, or 44p, to 5330p, after HSBC raised its target price to 6250p from 6175p. 

Shipping group Clarkson -made waves – up 4.2p, or 125p, to 3100p – after JP Morgan raised its target price to 3840p from 3740p.