Retirement home builder McCarthy & Stone (MCS) has warned that a slowdown in the secondary housing market could affect its ability to achieve targeted volume growth of 15 per cent in the year to 31 August 2017. New reservations in July were down from the first nine months of the financial year, while cancellation rates were higher.
However, there was some pick up in August, although activity in September and October will provide a much clearer guide as to where the market stands. Much of the uncertainty is being generated by the referendum vote and the possible effects on the secondary housing market, with more potential downsizers tending to sit on their hands rather than putting their property on the market.
Even so, underlying demand for purpose-built retirement homes in unlikely to go away. Over 3.5m people in the UK over 60 have expressed an interest in buying a retirement property against a total of just 141,000 specialist retirement properties for owner occupation that have ever been built. Trading in the year to 31 August saw the group increase legal completions by 20 per cent to 2,299, while net average selling prices rose by 8 per cent to £259,000. To meet anticipated demand, a total of 64 new sales outlets were opened, although incentives were increased in order to meet volume targets.
Despite this, underlying operating margins are expected to have improved by around 100 basis points, thanks to a reduction in the time taken between securing land and starting on site and additional operating efficiencies.
