Surrey-based housebuilder Crest Nicholson has reported observing early indicators of recovery within the UK housing market, despite acknowledging a challenging year in 2025 and missing its annual profit expectations. The company noted a noticeable uptick in inquiries since the conclusion of 2025, attributing this positive shift to declining mortgage rates and rising wages that are beginning to alleviate affordability pressures for potential buyers.
A Year of Significant Challenges
Crest Nicholson provided a sobering assessment of the market conditions that prevailed throughout 2025, describing the period as markedly sluggish compared to much of the preceding decade. The firm highlighted several contributing factors to the depressed levels of demand, including comparatively high mortgage rates, persistently low consumer confidence, and a notable absence of meaningful government support for the sector. This difficult environment was reflected in the company's operational performance, with completions and profits experiencing substantial declines.
Financial Performance and Market Realities
The developer reported completing the sale of 1,691 new build homes in the year to the end of October, representing a reduction of approximately one-tenth compared to the previous year. Pre-tax profit figures told a similar story, coming in at £26.5 million – a decrease of about 31% from the prior year and falling below the company's previous guidance range of £28 million to £38 million. Crest Nicholson informed investors that this underperformance was primarily driven by a weaker market during the second half of the financial year, with challenging conditions persisting into the new calendar year.
Demand failed to materialise following the autumn budget, and consumer confidence remained stubbornly low despite four interest rate cuts implemented throughout 2025. The company's accounts also revealed material uncertainty regarding its position as a going concern should trading conditions deteriorate further, though management expressed confidence in maintaining banking covenants and securing necessary amendments through ongoing dialogue with lenders.
Glimmers of Optimism Emerging
Despite these challenges, Crest Nicholson identified promising forward indicators that suggest improving activity levels since Boxing Day. The company highlighted increased website visits, rising inquiries, and improved appointment conversion rates as early signs of market recovery. These positive signals coincide with broader economic factors that should support housing market improvement over the longer term, including lower interest rates and government initiatives aimed at supporting housebuilding to address both affordability and supply constraints.
Navigating a Transitional Period
Chief executive Martyn Clark characterised 2026 as a transitional year within a difficult market environment, with the company implementing a range of self-help measures to navigate ongoing challenges. These measures included the closure of one divisional office in December, resulting in approximately 50 redundancies, as part of broader efforts to streamline operations and improve efficiency. The firm emphasised its focus on maintaining financial stability while positioning itself to capitalise on emerging recovery signals as they develop throughout the coming months.
Crest Nicholson's assessment presents a nuanced picture of the UK housing market – one that acknowledges persistent difficulties while identifying early, tentative signs of improvement. The interplay between mortgage rate reductions, wage growth, and government policy will likely determine whether these initial positive indicators translate into sustained recovery across the property sector.
