The property firm behind major Tayside housing developments has issued a profit warning, sending its shares spiralling downwards.
Springfield Properties is behind the Bertha Park village development on the outskirts of Perth and the Dykes of Gray scheme in Dundee.
Its shares were down more than 17% by mid-morning, after it warned higher interest rates and economic uncertainty is hitting demand for private homes.
Springfield said it is taking a cautious approach to expectations of future sales rates.
Private house price growth is “no longer anticipated in the short term, rendering the increase in build costs more difficult to mitigate,” the company added.
Affordable homes and rented sector woe
The housebuilder also said it will continue to hold off from entering into long-term fixed price contracts for affordable homes.
It is awaiting the outcome of a Scottish Government review of its investment “benchmark” for the sector.
In addition, Springfield said its plans to deliver homes for the private rented sector are “unlikely to come forward in the next couple of years following the Scottish Government’s introduction of a temporary rent freeze”.
The negative impact on Springfield’s shares following the trading update earlier today wiped more than £18.5 million off the Elgin-headquartered group‘s market value.
The company – led by chief executive Innes Smith – warned of a likely fall in full-year profits.
But it also said it remains “on track for good revenue growth” for 2022-23, as customers are contracted into their purchases at an early stage in the housebuilding programme.
Industry-wide inflationary pressures in materials and labour have become more acute.”
Elsewhere in the trading update, the firm said: “The rise in interest rates and broader economic uncertainty have impacted reservations for the group’s private housing.
“Industry-wide inflationary pressures in materials and labour have become more acute as supply chain disruption has persisted and 7.5% inflation has been prudently applied to the group’s future costs for H2.”
Springfield’s Bertha Park development won a top housebuilding award last month.