Scottish housebuilder Cala Group has blamed the UK Government’s controversial mini Budget last autumn for disrupting an overall “excellent” year in 2022.
The fiscal policy of the Liz Truss/Kwasi Kwarteng Tory administration and its devastating impact on financial markets put the brakes on demand for new homes, said Cala, which has its roots in Aberdeen.
High inflation and the cost-of-living crisis continue to present “significant” challenges for the industry in 2023, the firm added.
2023 will be challenging for everyone, due to the increased financial pressures associated with higher living costs and mortgage repayments.”
Kevin Whitaker, chief executive, Cala Group.
But a “fundamental shortage” in housing supply and the “quality of design and construction” of its homes in an increasingly “selective” market can revive sluggish sales and help Cala navigate the current tough trading conditions, the company said.
Mike Naysmith, managing director, Cala Homes (North), believes a “greater variety of homes than ever” across eight live sites will help the firm to prosper in the north-east.
“2022 was a positive year for Cala in the north-east, with several notable new developments launching and further investment in land,” Mr Naysmith said.
He added: “There’s no doubt that we face significant challenges linked to wider economic factors in 2023, but in the north business we are in a strong position to manage changes in market conditions, with a greater variety of homes than ever.
“Our focus on land will continue, with several planning applications recently submitted and more set for 2023 and beyond.”
Cala’s current Aberdeen projects include flagship sites at Craibstone, Grandhome and Milltimber.
Mr Naysmith was speaking as the group announced a big jump in profits during 2022.
The pre-tax figure was up 27% year-on-year at £169 million, a new record for the firm, while revenue also rose, by 9%, to £1.36 billion.
Home completions last year totalled 3,027 – 4% up on the 2021 figure of 2,904 units.
The business recorded an uptick in private average sales price to £492,000, compared with £462,000 in 2021.
Cala said it started 2023 with 751 forward private reservations, worth £396 million by gross development value. This is down from 994 pre-sold units, worth £488 million, a year ago.
Chief executive Kevin Whitaker said: “Cala has delivered an excellent performance across 2022, achieving significant increases in revenue and pre-tax profit.
“This was attained through an increase in new home completions, strong sales price growth and the mix of homes sold during the year.
“We benefited from excellent market conditions in the first nine months of the year.”
Truss turmoil
The impact of the mini Budget on financial markets – the beginning of the end for the short-lived Truss government – directly influenced buyer confidence in the final quarter of 2022,” the CEO said.
He added: “This has naturally affected sales rates in recent months and impacted the strength of our forward sales position.
“2023 will be challenging for everyone, due to the increased financial pressures associated with higher living costs and mortgage repayments.
Our North of Scotland team volunteered their decorating skills to help our #charity partner, @samaritans, at thier Aberdeen branch, giving the rooms a fresh coat of paint and donating furniture from our previous showhomes 💚 pic.twitter.com/fSXCT1FxED
— calahomes (@CALAHOMES) January 14, 2023
But Cala is “well-placed” to navigate the changing market conditions,” Mr Whitaker said,” adding: “The fundamental shortage in the supply of new homes continues to support new-build delivery.
“In a more selective market, the quality of design and construction of Cala’s homes, alongside industry-leading customer service, continue to attract homebuyers.”
Demand for more energy-efficient homes is also expected to drive the business forward.
Mr Whitaker said: “Now more than ever, against the backdrop of increased fuel costs and reduced availability of secondhand homes, new homes offer a great alternative.
“Excellent energy and thermal efficiency help minimise energy use, while facilitators like part exchange support customers through their move.”
It all started in Aberdeen
Cala employs more than 1,300 people across 10 offices and has around 75 live developments at any time.
The business was founded in 1875 as the City of Aberdeen Land Association and was the first Scottish company listed on the London Stock Market. Today, its Scottish and English operations are run from offices in Edinburgh and Wooburn Green, Buckinghamshire.
Financial services giant Legal & General acquired full control of the group in March 2018, raising its stake from 47.9% to 100% in a £315 million-plus deal.
