UK homebuilder warns of slowdown in demand as rising rates bite

PENT-UP demand for British homes triggered by the coronavirus pandemic is beginning to fade, according to one of the UK’s biggest homebuilders.

Bellway said the average weekly number of homes reserved at its sales sites in the nine weeks since Aug 1 fell to 191 per week compared with 218 per week in the same period last year, marking a decline in the UK’s key autumn selling season. Last week, Barratt Developments warned of tougher times ahead as the cost-of-living crisis and soaring mortgage rates combine to undermine the UK property market.

Bellway also said it expects the overall average selling price to fall to around £300,000 (S$482,647) in the current financial year, compared with £314,399 in 2022. To be sure, that reflects a higher proportion of social housing completions, the company said in a statement on Tuesday (Oct 18).

UK homebuilders have reported bumper profits this year as demand proved more resilient that expected. There are increasing signs that’s now coming to an end as rapidly rising borrowing costs and a cost of living crisis combine to limit potential buyers’ spending power.

British mortgage rates breached 6 per cent for the first time in over a decade after former Chancellor Kwasi Kwarteng roiled markets with a package of unfunded tax cuts in Sept 23, a move which led to his exit from the role last week. Since then, his successor Jeremy Hunt has stepped in to reverse the controversial mini-budget, an intervention which may bring down the cost of mortgages. BLOOMBERG