Reservation rates at two major housebuilers are recovering (PA)
(Picture: PA Archive)There were more signs today that the disruption in the housing market was easing after the turmoil that followed the budget proposals of the short-lived government of Liz Truss.
Amid a series of updates from the sector, FTSE 250 housebuilder Redrow said that the market “appears to be finding a new, natural level.” The assessment came as it reported first-half revenue of £1.03 billion, around the record of £1.05 billion hit last year, with profit for the period slipping to £198 million from £203 million.
The Flintshire-based company’s rate of private sales in the period halved, with the drop coming at a time when an unprecedented number of fixed-rate mortgage deals were pulled after the then-chancellor, Kwasi Kwarteng, issued his mini-Budget. Redrow called the measures, which upended the outlook for UK interest rates, “disastrous”, pointing out that they came “during an existing cost of living crisis.”
It meant that “the new homes market found itself in the eye of the storm,” it said, but since the crisis, “consumer confidence has begun to show early signs of returning. Redrow called the start to the second half of the year “encouraging”, with reservation rates recovering.
It added: “Whilst 2023 will be a challenging year as the market resets, early indications are better than anticipated and the market appears to be finding a new, natural level.”
Fellow developer Bellway also noted improving trends, saying it was “encouraged” by better visitor levels and an “improvement in reservations” after “a period of weaker trading through to the end of December” when “ higher mortgage rates and economic uncertainty” hit confidence.
It also pointed out that the “issues” in the housing maket then were “compounded for first-time buyers given the recent expiry of Help-to-Buy and the shortage of affordably priced, higher loan-to-value mortgage products.”
Since then, visitor numbers are “significantly ahead” from the last part of 2022, leaving Bellway noting “grounds for optimism for the spring selling season.”
