Homebuilder Crest Nicholson has adjusted its pre-tax profit expectations for the full year to £50m, down from its forecast of £73.7m earlier this summer.
In a trading update, the FTSE 250 firm said ‘persistently high inflation and rising interest rates’ were dampening demand for homes, with the higher cost of mortgages putting off purchasers, particularly first-time buyers.
“While pricing has remained resilient in a market with limited supply and few distressed sellers, the economic uncertainty is deterring prospective home movers,” the company said.
Despite signs of falling inflation, Crest Nicholson anticipated ongoing market turbulence due to high short-term core and wage inflation, and with further interest-rate rises expected.
It also noted a £4m rise in costs on its Brightwells Yard project in Farnham, Surrey.
In June, Crest Nicholson reported a significant slump in pre-tax profit for the six months to 30 April, down by 60 per cent compared with the year before.
The firm indicated that it was looking to reduce overheads and was negotiating bulk deals with long-term partners.
“The firm remains positive and confident about the outlook for Crest Nicholson,” the report said.
“While the current trading conditions are challenging, over the medium term it expects inflation to abate and mortgage rates [to] start to reduce.”
Builders’ merchant Travis Perkins and homebuilder Bellway have also recently warned of reduced profits amid a wider homebuilding downturn.