Housebuilder Bellway says it has seen demand drop on the back of higher mortgage rates, though the firm insists there are signs of improvement.
The North East developer gave a trading update for the period between February and June in which reservations averaged 190 per week, compared with 253 in the same period of 2022, and its cancellation rate increased to 15% from 12%. Investors were told the firm was working with a significantly smaller order book of £1.7bn, down from £2.4bn - with further reductions likely this year.
The numbers are set against higher mortgage rates though customers were said to be adapting to higher borrowing thanks to wage rises. Bellway said that while overall mortgage availability has improved in recent months, fluctuations to prices provoked by changing interest rates was affecting shorter-term availability.
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The firm also reiterated that the end of the Help to Buy scheme had led to a lower year-on-year demand for first time buyers. Incentives were being used in some parts of the country to attract customers as the average selling price fell from £314,399 to £300,000.
Within the figures, Bellway revealed it has significantly toned down its land buying with the purchase of just 4,342 plots in the period, compared with 13,496 last year, representing a total contract value of £362m versus £926m. The firm has also decided not to proceed with buying 886 plots across four previously approved sites.
Jason Honeyman, group chief executive of Bellway, said: "Bellway has delivered an encouraging trading performance, buoyed by a seasonal uplift through the spring, and the group is on track to deliver full year volume output of around 11,000 homes.
"While customer interest is currently healthy, the board remains mindful that cost of living pressures and the uncertain path of future interest rates could impact housing demand. Notwithstanding this, Bellway's experienced teams, strong balance sheet and high quality land bank, position the group well to successfully navigate changing market conditions and continue to play an important role in increasing housing supply in the years ahead."
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