(Reuters) -British housebuilder Bellway Plc on Tuesday flagged renewed slowdown concerns as a further climb in mortgage rates and broader cost-of-living pressures suppressed demand in the sector.
The strengthening prospects of further interest rate hikes by the Bank of England have stymied hopes of a strong recovery in the UK housing sector, after a smaller-than-expected decline in the inflation rate in April forced some lenders to rein in or reprice their mortgage offers.
Credit ratings agency Moody’s last week warned British house prices are likely to fall 10% over the next two years, while the country’s lenders approved fewer home loans in April than the prior month, with signs of housing market recovery in early 2023 becoming a distant memory.
“While customer interest is currently healthy, the board remains mindful that cost-of-living pressures and the uncertain path of future interest rates could impact housing demand,” CEO Jason Honeyman said in a statement.
The FTSE 250 company said the recent expiry of Help-to-Buy scheme in England has led to lower year-on-year demand from first-time buyers, and there remained a relative lack of affordable higher loan-to-value mortgage products.
Bellway, which constructs everything from one-bedroom apartments to six-bedroom family homes and luxury penthouses, said lower reservation rate during the trading period from Feb. 1 until June 4 has resulted in a reduced forward order book of 1.71 billion pounds ($2.14 billion), compared with 2.40 billion pounds a year earlier.
Last week, Bellway’s midcap peer Crest Nicholson also flagged a further slowdown in the sector.
($1 = 0.7981 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Sherry Jacob-Phillips)
