One of Britain’s biggest builders is slashing jobs and warned of a tough year ahead as the property slump continues.
Painful increases to mortgage rates and the closure of the Help to Buy programme in March have caused demand for houses to plunge.
Now Bellway is closing its South Midlands and London Partnerships divisions in a restructure that will cost 90 jobs.
It warned home sales would ‘decrease materially’ over the coming year.
Jason Honeyman, Bellway’s chief executive, warned: ‘The cost of living pressure has affected demand and, given affordability remains constrained by higher mortgage interest rates, trading is likely to remain challenging.’
Down tools: Bellway is closing its South Midlands and London Partnerships divisions in a restructure that will cost 90 jobs
He added: ‘Given the level of the order book and low reservation rates, legal completions are expected to decrease materially.’
In the 12 months to July the value of its forward orders slumped to £1.2billion, which was down from £2.1billion a year prior, as weekly reservation rates tumbled 28.4 per cent,
Housing revenue slid 3.4 per cent to £3.4billion for the fiscal year, while its average selling price fell to £310,000 from £314,399.
A series of interest rate increases over the past year has made many buyers’ dreams of owning their own home unattainable.
The Bank of England pushed through its 14th consecutive rate hike last week, pushing the level to 5.25 per cent.
Bellway is still trying to entice disillusioned buyers, coming up with an offer to pay up to £24,000 towards mortgage payments for up to two years.
Hikes to mortgage rates in June and July hammered demand particularly hard, Bellway added, as its shares slipped 0.9 per cent, or 20p, to 2196p yesterday, with the stock down around 5 per cent over the past year.
AJ Bell investment director Russ Mould, said: ‘Shares are holding firm, so perhaps markets have already priced in a lot of the bad news.’
There has been some optimism that the Bank of England might not need to raise its base rate much further, given that inflation has dropped this summer.
It fell to 7.9 per cent in June, down from 8.7 per cent in May, according to the latest data from the Office for National Statistics.
And many major lenders have cut their mortgage rates this week, including big names TSB, Nationwide and HSBC.
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