Publishing its preliminary annual results, Bellway noted that since the pandemic it had seen a heightened level of demand, as increasing numbers of prospective buyers considered a new build.
However, it said that this demand has “moderated” since the summer. In the nine weeks since the start of August, weekly reservations stood at 191 per week, compared with 218 and 239 in the same periods in 2021 and 2020 respectively.
The builder noted that while it had entered the year with a strong forward order book, “given the backdrop of rising interest rates and wider economic uncertainty, the board currently expects to deliver volume at a similar level to the prior year”.
Bellway pointed to the end of the Help to Buy scheme as a particular challenge, noting that its focus on two-storey family homes attracted a wide range of buyers and “provides some resilience for the year ahead as Help to Buy expires”.
Jason Honeyman, the chief executive, acknowledged that recently mortgage lenders have “sought to moderate” the number of fixed rates on offer, but said he did not expect a “long-term structural decline” in the availability of mortgage products.
He continued: “In general, there remains good availability of finance, particularly for customers with higher deposits. For customers with a five per cent deposit, the availability of 95 per cent loan to value mortgages remains relatively limited, although some lending institutions are gradually reintroducing these products for new-build properties, including those provided through the Deposit Unlock scheme.”
Only the brave are buying now
Bob Singh, managing director of Chess Mortgages, said that with Help to Buy ending and the increases in interest rates, “it’s a brave buyer who buys now”.
He added: “Lenders’ new affordability calculations for both owner-occupier and buy-to-let mortgages mean buyers have to put in far higher deposits to bridge the gap between the buying price and what the banks will lend. The stamp duty savings, whilst helpful, will do nothing to improve the situation.”
Joe Garner, managing director of NewPlace, said that the new build estate agents he works with are reporting a drop of around a third when it comes to enquiries.
He continued: “The mortgage product withdrawals and rate hikes of recent weeks have pushed the market over a cliff with first-time buyers now stranded in a no man’s land where houses are unaffordable and rental costs have gone stratospheric due to increased demand.”
