Bellway puts the brakes on housebuilding

BELLWAY has cut the number of homes it plans to build this year as high mortgage rates have dampened demand.

The housebuilder said it is expecting to build 3,445 fewer homes in this financial year as potential buyers have been put off by mortgage rate hikes.

Bellway said it is aiming to build just 7,500 homes this year as the selling price of its properties slumped due to a lack of customer demand. It built 10,945 in the year ended July 31, a 2.3pc drop compared to the 11,198 it constructed in the previous year. The overall reservation rate during the year was 28.4pc lower than the prior year at an average of 156 per week, down from 218. The trend has continued into the current financial year, with reservations dropping from 191 a week this time last year to 133 a week. Demand for new homes has remained strong among second-time buyers, with those taking another step up the housing ladder accounting for 63.8pc of private reservations.

However first-time buyers have been squeezed the most by rising interest rates as they often need a higher loanto-value mortgage, Bellway said. The drop in demand among first-time buyers was exacerbated by the end of Help-toBuy in March this year.

Property prices have fallen due to the slump in demand, with an average selling price of £295,000 in the current financial year, down from £310,306.

However, it added that a ‘wider than usual range of outcomes are possible’ saying that the final number of developments completed this year will depend on the trajectory of mortgage rates, and demand in the autumn and spring.

Chief executive Jason Honeyman (pictured) said: ‘Bellway has delivered a resilient performance against a backdrop of rising mortgage interest rates and challenging market conditions.

‘Looking ahead, our operational strength and experienced teams will enable the group to successfully navigate a changing market, and we will maintain a clear focus on delivering high-quality homes to our customers.’