Persimmon warns first-time buyers struggling to afford new homes in UK
Sales of new homes to first-time buyers are struggling, according to housebuilder Persimmon, as higher interest rates make mortgages less affordable.
The company, which is one of the UK’s largest domestic property developers, said people looking to get on the housing ladder were facing “stretched affordability” and less choice on home loans.
Rising mortgage rates have led to higher loan-to-value ratios for first-time buyers, “particularly in regions with higher house prices”, Persimmon said in a statement to the stock market on Wednesday.
The Bank of England is widely expected to raise interest rates for the 12th time in a row next month, by 0.25 percentage points to 4.5%, as it attempts to curb inflation, which unexpectedly remained above 10% in March.
In a Persimmon warned last month that housebuilders would face a “tough year” in 2023, in a further sign of the housing market cooling, and predicted sliding sales a decrease in profits for the year.
In its update to the market on Wednesday, the company reported a 42% drop in the number of new homes it sold between January and March, 1,136 properties compared with 1,950 in the same period last year. However, it said sales had begun to pick up in recent weeks.
Persimmon struck a more optimistic tone than it had in March, when it reported challenging trading conditions for the final months of 2022.
On Wednesday, the housebuilder said it was seeing “early signs of increasing consumer confidence”, particularly in demand for its three-bed homes as well as four and five bed.
Dean Finch, the chief executive of Persimmon, said: “Trading over recent weeks has offered some signs of encouragement, with visitor numbers up, cancellation levels normalising and sales rates continuing the steady
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