UK homebuilders under pressure as lofty mortgages deter first-time buyers
By Aby Jose Koilparambil
(Reuters) — British homebuilders are building fewer homes, cutting down on land purchases and offering more incentives as high mortgage rates and the lack of any immediate support from the government make homes less affordable for first-time buyers.
Top UK residential builder Barratt said this month it would build around 20% fewer homes in its fiscal year 2024, while high-end builder Berkeley expects annual sales to fall by a fifth.
Midcap firms Bellway and Crest Nicholson have also pointed to high mortgage rates hampering demand from first-time buyers.
And that's not all. Even a potential revival of the government's 'Help to Buy' scheme, which offered incentives to first-time buyers, will not be enough to improve affordability, analysts have said.
The scheme offered incentives such as the payment of just 5% of the purchase price as minimum deposit and exemption from interest payment for the first five years.
«Builders can only build if buyers can buy and the lack of certainty of demand will clearly have an impact on industry confidence and its ability to invest in new land and sites,» said Steve Turner, executive director at Home Builders Federation, a trade association representing private sector homebuilders in England and Wales.
However, homebuilders are chipping in with measures to boost demand as they desperately look to hold on to prices.
Bellway said it continues to use targeted incentives in certain parts of the country to attract customers and secure reservations.
Peel Hunt analyst Sam Cullen said housebuilders are providing incentives running at probably 4%-5% of the selling price, up from about 3% in March/April.
«The incentives could be an upgraded kitchen, better quality carpets or
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