Falling mortgage rates fuelling housing demand after tougher year, Bellway says

The firm said it was optimistic about the future of the property market despite a 30% drop in the number of homes it sold over the past year.

Housebuilder Bellway has warned it will build nearly a third fewer homes over the year ahead amid slumping demand and falling house prices (Bellway/PA)

Falling mortgage rates, slower inflation and wage rises have helped lift consumer confidence and make homebuying more affordable, developer Bellway has said.

The firm said it was optimistic about the future of the property market despite a 30% drop in the number of homes it sold over the past year.

Recent months have seen an “encouraging” level of customer enquiries and people reserving a new home.

Jason Honeyman, Bellway’s chief executive, said customer demand during the year has “benefited from a moderation in mortgage interest rates which has helped ease affordability constraints”.

The Bank of England cut the base interest rate last week from 5.25% to 5%, but lenders had already been slashing rates in the weeks leading up to the move.

Several sub-4% mortgage deals entered the market this week as competition to offer cheaper loans heats up.

Bellway said its forward order book, meaning properties that have been ordered but not yet bought, was significantly higher at the end of July than the same time last year – at 5,144 homes compared with 4,411.

This growth, along with the recent improvement in the market, means the firm expects to return to growth over the next year.

Nevertheless, Bellway is among housebuilders to be emerging from a more bruising period in the wider housing market.

The firm completed the sale of about 7,650 homes in the year to the end of July, down 30% from 10,945 the prior year.

It generated housing revenue of over £2.35 billion, more than £1 billion less than the £3.4 billion it made this time last year.

However, the private reservation rate – meaning the number of people putting their names down for a home – averaged at 124 per week, about 14% more than the previous year when demand had started to drop.

The average selling price for a home decreased slightly from £310,300 to around £308,000, Bellway said.

It also highlighted the new Labour Government’s planning reforms to kickstart housebuilding across the UK.

“Bellway is encouraged by the Government’s plans to reform the planning system to support a marked increase in the supply of new homes across the country and we look forward to the publication of its long-term housing strategy in the coming months,” the firm said.