Elgin-based house builder Springfield Properties said its revenue fell 25% to £121.7 million and statutory profit before tax fell 80% to £1.2 million in the six months ended November 30, 2023.

Springfield said private housing demand “continued to be impacted by high interest rates, mortgage affordability and reduced homebuyer confidence.”

Springfield, which is building a number of new communities throughout Scotland, has paused dividend payments until its bank debt is “materially reduced.”

In recent months, the firm has been selling land to reduce its debt.

The firm reported a total owned land bank of 6,421 plots, 86% with planning permission, and strategic options over a further 3,217 acres, equating to 32,200 plots – one of the largest land banks in Scotland.

On its “current trading and outlook” Springfield said it is on track to report results for FY 2024 in line with market expectations, including meeting its target to reduce net bank debt to £55 million by May 31, 2024.

“Private housing reservation rates in calendar year 2024 are showing initial signs of recovery with a return in homebuyer confidence,” said the company.

“Demand remains strong in affordable housing, with the group confident of signing further contracts in the near term.

“Advanced negotiations are underway for further profitable land sales.

“The Scottish Government’s emergency rent cap is due to end on 1 April 2024, which offers the prospect of a return of investment in Scotland by private rented sector (PRS) providers.

“Build cost inflation is continuing to reduce and stabilising around 2.5%.

“Long-term fundamentals of the Scottish housing market remain strong with an undersupply of housing across all tenures and greater private housing affordability than the UK as a whole.

“With a large number of sites with planning already in place, the group is able to quickly accelerate site development as market conditions improve and is well-placed to satisfy pent-up demand for high-quality, energy efficient housing in attractive locations across the country.”

Springfield Properties CEO Innes Smith said: “Trading for the first half of the year was in line with our expectations, and reflects the challenging market conditions experienced across the industry.

“To mitigate the impacts of the downturn and ensure we are in a stronger position for when trading conditions recover, we took decisive actions to maximise cash generation and reduce our debt by year end.

“A key element of this was actively pursuing profitable land sales. We are pleased to have agreed sales worth £18m so far and we expect to conclude negotiations for further sales in the near term. 

“Looking ahead, we are encouraged by the improvement in private housing reservations that we have experienced in recent weeks and the signs of increasing homebuyer confidence, as has been reported by other housebuilders.

“We are receiving strong demand in affordable housing — and have already signed contracts worth c. £40m since 31 May 2023. We are also hopeful that the ending of the Scottish Government’s emergency rent cap in April 2024 will enable a return of PRS activity.

“Alongside this, build cost inflation is continuing to reduce and is expected to stabilise at low levels. We are on track to meet our year-end target for net bank debt, which will continue to reduce in the next financial year.     

“The fundamentals of our business and our position within the Scottish housing market remain strong. We have one of the largest land banks in Scotland with over 6,421 owned plots, 86% of which has planning permission, and a further 3,217 acres of strategic land.

“We have an excellent reputation of offering high quality, energy efficient homes in desirable locations in key housing markets, and a track record of delivering developments exclusively for affordable housing. In addition, there is an undersupply of housing of all tenures, which can only be addressed through building new homes.

“As a result, while there remains uncertainty in the near term, with our position having been strengthened through the decisive action that we have taken, we remain confident in Springfield’s prospects.“