Results from small cap housebuilder MJ Gleeson (GLE) demonstrate the same positive trend as its larger rivals and its unique model provides reassurance on future growth prospects.

There is growing concern that housebuilders may be reaching their high-water mark as market conditions become gradually less favourable for the sector. But Gleeson is different in that it builds affordable low-cost homes in the North of England – its average selling price is £122,700.

Having achieved its target of building 1,000 homes a year, the company now plans to double that target to 2,000 within five years.

Chief executive Jolyon Harrison says: ‘Our chosen segment of the market is large, mostly untapped and not really affected by the vagaries of politics or the general economy.

‘This is because the outgoings relating to the purchase of one of our homes are significantly less than renting a council or housing association house.’

One potential risk to the business is a scaling back or cancellation of the Government’s ‘Help to Buy’ scheme which is used by two thirds of its customers, although management have previously commented they are not reliant on this giveaway.

Pre-tax profit for the 12 months to 30 June was up 17% and the dividend was hiked 66%. The housebuilding arm was supported by a strategic land sales operation in the South of England.

The shares trade on 2.1 times historic book value against an average for its peer group of 1.87 times.

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