Fewer homes have been built against a backdrop of higher mortgage interest rates, new figures reveal.
Housebuilding giants Bellway and now Persimmon are among the first to indicate the scale of the problem with jobs being cut amid a drop in the number of new homes built.
Persimmon today reported a fall in revenue as it sold considerably fewer houses during the first six months of the year.
Where, though, should we point the finger of blame over a housing market that should be making a roaring recovery but is now in slowdown and laying off builders?
“Last year’s mini-Budget sent shockwaves through the entire housing industry and its impact is clear to see in Persimmon’s results, with home sales down by more than a third,” said Julie Palmer, partner at Begbies Traynor.
READ MORE: Housebuilder to cut jobs and build fewer houses
This was when mortgage costs first started to rise. It was when the mini-Budget took sterling to its lowest rate against the dollar since records began, the Bank of England intervened, the International Monetary Fund interjected, and it was feared some pension funds were on the brink.
Persimmon's pre-tax profit fell by around two thirds to £151m.
The business said it had completed 4,249 new homes over the period, a reduction from 6,652 in the same time frame a year ago.
READ MORE: Social housing boost
"Against a backdrop of higher mortgage rates, the removal of Help to Buy and significant market uncertainty, Persimmon has delivered a robust sales rate excluding bulk sales while growing the private average selling price in our forward order book and also securing cost savings," said chief executive Dean Finch.
Analyst Ms Palmer also said: “In response to a tough market and spiralling inflation that is making building homes more expensive, Persimmon has cut 300 roles and is seeking a further £25 million of savings.
“To make homes more affordable, it’s also looking to reduce prices by cutting specifications of the properties it builds in areas which the company says ‘are less important to customers’.”
READ MORE: Stewart Milne puts firm back up for sale
Andy Murphy, director at Edison Group, said that the half-year report, “revealing a 65% slump in profit, underscores the challenging landscape of Britain's housing sector”.
The country is paying the price now and for the foreseeable future for the experimental ideologies of the last Conservative Prime Minister Liz Truss and former Chancellor Kwasi Kwarteng, while the current Prime Minister Rishi Sunak’s goal of limiting the damage by reining in out-of-control interest rates seems to be getting more elusive.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel