Crest Nicholson's stock tanks on rising costs

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Housebuilder Crest Nicholson's shares tumbled more than 13% after warning its operating margin has been squeezed by rising building costs.

Crest (BSE: CREST.BO - news) 's announcement, in a trading update ahead of its full half-year results statement, pulled down the market value of other house builders.

Persimmon (Frankfurt: 882058 - news) , Barratt, Berkeley and Taylor Wimpey (LSE: TW.L - news) all slipped more than 1% amid concerns the housing market was cooling.

The FTSE 250 company, which builds homes primarily in London and the South East, had expected operating margins of 18-20%.

"The experience of generally flat pricing against a backdrop of continuing build cost inflation at 3-4% will mean that operating margins for the full year are expected to be around 18%," the company said.

Homes priced at more than £1m are proving more difficult to shift because of a slow second-hand market, the company said.

Chief (Taiwan OTC: 3345.TWO - news) executive Patrick Bergin said: "Flat pricing has had a negative impact on margins, but volumes in the new build housing market continue to be robust."

Crest said average selling prices of its properties rose 5% to £439,000 in the first half of its current fiscal year and this is "expected to represent a peak level for the business".

Earlier this year, the company posted a 6% rise in pre-tax profit but warned price growth was weaker in central London due to higher rates of stamp duty.

It also said a shortage of skilled labour and a weaker pound following Britain's decision to leave the European Union was likely to increase the cost of imported materials.