Anthony Codling, an analyst at RBC Capital Markets, said Bellway investors will breathe a sigh of relief at Tuesday’s announcement.
He said: “Bellway’s engine is firing on all cylinders, so we question whether it needs to buy the misfiring Crest Nicholson – if it ain’t broke, don’t fix it, and it seems Bellway has decided it ain’t broke, there is nothing to fix, so no need to buy Crest.”
Shares in Bellway rose 4pc following the announcement, while Crest Nicholson plunged by more than 17pc.
Bellway first made an unsolicited approach for Crest Nicholson in June, proposing an initial £650m bid that Crest said “significantly undervalued” the business.
It later increased its offer to £720m, which came after Crest Nicholson posted a £31m loss for the six months ending April.
Bellway’s reversal comes days after revenue and new home completions declined less than expected.
Turnover fell by around 31pc to £2.4bn, but the housebuilder said the improved picture for mortgage interest rates has eased affordability constraints and improved consumer confidence.
New home completions fell to 7,654 homes, from 10,945 in the previous year, with the overall average selling price of those falling to around £308,000, from £310,306.
Jason Honeyman, the group’s chief executive, said the “improving” trading backdrop put the developer in a “strong position to return to growth in the financial year 2025”.