One of the U.K.’s biggest homebuilders is to cut the number of houses it constructs by nearly a third next year as higher interest rates and stretched consumer budgets reduce demand for new properties. Bellway
which is listed in London’s mid-cap FTSE 250
said on Tuesday it was targeting building around 7,500 homes in the 2024 fiscal year, compared with 10,945 in the previous year.
“Since the start of the new financial year, customer demand continues to be affected by mortgage affordability constraints, with reservations below the comparative rates in the prior year,” Bellway said as it delivered preliminary results for the year to the end of July. The Newcastle-based builder said it expects its overall average selling price to fall 5% to £295,000 ($359,250) in the 2024 financial year, from £310,306 in 2023. Underlying profits fell 18.1% from the year before to £532.6 million ($648 million). Bellway’s decision to trim production comes as U.K. two-year fixed mortgage rates sit just shy of multi-year highs around 6.5%. This follows the Bank of England’s sequence of interest rate hikes designed to damp inflation that is still running at more than three times the central bank’s 2% target. As higher mortgage costs bite, the average U.K house price has fallen 5.3% over the year to September, according to Nationwide, a lender. “It’s a miserable time to be a housebuilder despite operating in a country with a chronic housing shortage,” said Russ Mould, investment director at AJ bell. “Selling prices haven’t fallen off a cliff which is reassuring for the company. However, it is at the mercy of the …