The warning comes from Barratt Developments in its trading update today. Demand for new-build houses in the UK is slowing, according to Barratt Developments, the country’s largest housebuilder.
In the past financial year buyers
reserved an average of 281 homes per week, this financial year to date the
average figure has fallen to 188.
David Thomas, Chief Executive at
Barratt Developments, said that the slump in sales was due to the “wider
economic uncertainty” across the market.
Recently, Chancellor Kwasi Kwarteng’s
mini-Budget announcement saw the pound fall to a record low against the dollar
and prompt many mortgage lenders to remove their products from the market.
Since the mini-Budget, mortgage
products have slowly returned to the market but are still some way off the
numbers seen before Kwarteng’s fiscal event.
According to Moneyfacts data, there
were 3,961 mortgage products on the morning of the mini-Budget. Today this
figure stands at 2,969.
In addition to recent events,
inflation reached a 40-year high this year and the Bank of England made seven
consecutive base rate increases.
Rising interest rates
In its trading update, Barratt
Developments noted that mortgage rates have a significant impact on the health
of the housing market.
"The outlook for the year is less
certain with the availability and pricing of mortgages critical to the long-term
health of the UK housing market," Barratt Developments said.
Russ Mould, Investment Director at AJ
Bell, said higher mortgage rates could raise the average selling prices of new
“The FTSE 100 firm’s average selling
price on its order book is now £377,200, nearly 12 times the average UK annual
salary,” he said.
According to Moneyfacts data, average
mortgage rates have only continued to rise.
On 5th October 2022, the
average two-year fixed deal surpassed 6% for the first time since November
2008. A day later, the average five-year rate passed the same milestone for the
first time in over 12 years.
Today the average two- and five-year
fixed mortgage rates stand at 6.46% and 6.32% respectively. The last time both
these averages were higher was in 2008, the year of the financial crash.