Building slumps as higher mortgage rates hit Bellway

THE number of new homes built by major developer Bellway has slumped by 30pc amid a surge in mortgage costs and a battle with planning red tape.

Bellway built 4,092 homes during the quarter ending January, down from 5,695 a year before.

Housebuilders are facing a tough outlook after higher interest rates sent the number of first-time buyers falling to a decade low.

The average two-year fixed-rate

‘While the economic backdrop is uncertain we are encouraged by improved reservations’

mortgage on Thursday was 5.58pc, while five-year deals are averaging at 5.22pc, according to data analyst Moneyfacts.

Meanwhile builders have complained that a slew of planning rules are making it increasingly difficult to get permission for new developments. So-called nutrient neutrality regulations intended to prevent river pollution are a particular source of concern.

Jason Honeyman, chief executive at Bellway, said: “While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints and we are encouraged by the seasonal pick-up in customer leads and an improvement in reservations since the start of the new calendar year.”

The Newcastle-based builder’s revenue for six months to the end of January dropped 30pc to £1.25bn, due to a difficult housing market.

Mr Honeyman added: “Bellway remains well-placed to capitalise on future growth opportunities and will continue to play an important role in increasing housing supply.”

In a sign of positivity in the market, house prices rose last month as falling mortgage rates increased the number of potential buyers, according to the Halifax House Price index.

Property values increased by 1.3pc in January compared with the previous month and average house prices increased to £291,029, which was £3,900 more than last month.

Bellway told its shareholders yesterday that it has seen a recovery in demand with “encouraging levels of customer enquiries in the traditionally quieter winter trading period”.

Housebuilding across the country dropped last year as buyers held off for better rates. Barratt Developments and Redrow told shareholders earlier this week they built fewer homes in 2023.

Barratt and Redrow on Wednesday announced a £2.5bn merger, making new company Barratt Redrow by far the largest housebuilder in the UK.