The Press and Journal (Aberdeen and Aberdeenshire)
Housebuilder bounces back from a ‘difficult’ year with confidence
Ellon-based housebuilder Scotia Homes is hoping to benefit from improved sentiment in the sector after torrid trading in 2022-23.
Chairman Gary Gerrard described last year as “the most difficult period that the residential housebuilding industry has faced for over 15 years”.
He added: “Not since the financial crisis in 2008 have we seen such a dramatic slowdown in new house sales.
“Our colleagues have had to work so hard in extremely challenging circumstances.”
Higher inflation and interest rates, increased overheads and the impact of the cost-of-living crisis on consumers’ spending power were a perfect storm for the UK housebuilding industry.
North-east firm Stewart Milne Group (SMG) collapsed earlier this year.
A total of 217 SMG workers lost their jobs immediately. There have been at least 31 more redundancies since January 8.
Scotia’s bosses are predicting better times ahead in a recovering market.
Their confidence is partly down to “substantial” investment in new sites.
A “quality” land bank is the “bedrock” of the business, Mr Gerrard added.
Strong growth in turnover during the past few years is another reason for optimism.
Accounts posted at Companies House show sales surged to £53.8 million in the year to June 30 2023, from £40.7m in the previous 12 months.
This was despite the difficult trading climate which, together with an impairment charge of £1.2m in respect of a historic landbank purchase and the impact of higher borrowing costs, hit Scotia’s profits.
Pre-tax profits plunged to £384,790 in the latest period, from more than £3.9m previously. Operating profits were nearly 40% lower, at £2.7m.
Scotia said the year started well, with a good level of forward sales and higher average selling prices.
But there was a downturn in sales from October 2022 onwards.
New home completions for the year totalled 146 units, down from 165 in 2021-22.
Mr Gerrard said: “Scotia is uniquely positioned to capitalise on the market recovery.
“Our board continues to monitor market conditions closely and is using incentives such as partexchange, assisted sale and mortgage subsidy to support sales levels.
“The high levels of build cost inflation have subsided and... there is renewed confidence across the sector that 2024 will see the start of a sustained recovery.
“Since the beginning of January 2024, we have seen an increasing level of customer inquiries, particularly for our Aviemore site in the Cairngorm National Park.”
Scotia’s investments in recent years have focused on “prime sites for lifestyle living”.
These include its projects in Aviemore and Kincraig, in Caingorm National Park, as well as St Andrews.
Scotia also acquired fellow Ellon company Caledonia Homes (Scotland) during its 202223 trading year, paying nearly £4.2m for the business.
Mr Gerrard said: “The benefits of having our own in-house manufacturing facility for timber kits is already apparent. We are creating significant operational benefits and cost savings, as well as supporting our sustainability agenda.”