House buyers are waiting for the Bank of England to cut interest rates before purchasing new homes. This delay in buying is affecting the housing market, as suggested by recent evidence.
UK housebuilder Crest Nicholson has issued a profit warning, reporting that sales momentum has declined since Easter. This drop is due to volatile mortgage rates and buyers expecting lower borrowing costs later in the year.
A survey of chartered surveyors found that demand for homes had weakened in May. Financial markets predict that the Bank of England might cut interest rates in August or September.
Crest Nicholson’s financial results reflect these trends. The company reported a pre-tax loss of £30.9 million for the six months ending in April, compared to a £28.4 million profit for the same period last year. Despite a strong start to the spring selling season, momentum slowed due to fluctuating mortgage rates and the anticipated base rate reduction.
The upcoming general election is adding to short-term uncertainty. However, this is expected to settle after the election results in July. Crest Nicholson now forecasts full-year profits of £22 million to £29 million, significantly lower than analysts’ expectations of around £38 million. This news caused Crest Nicholson’s share price to fall by nearly 12% to 212.4p.
The Royal Institution of Chartered Surveyors (RICS) survey also indicated weakened housing demand in May. Tarrant Parsons, a senior economist at RICS, noted that the recent recovery in the housing market has reversed due to higher mortgage rates. However, he believes this delay will lead to a modest improvement once the Bank of England lowers interest rates.
Regional differences in housing demand were also highlighted. Demand was weakest in the South East and South West of England, while house prices remained strong in Scotland and Northern Ireland.
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Conclusion
The current slowdown in the housing market, driven by high mortgage rates and economic uncertainty, has led buyers to delay purchases in anticipation of future interest rate cuts. Despite these challenges, experts predict a gradual recovery. If you need to sell your house fast, Angel Properties is here to help. Contact us now or enter your address at angelproperties.uk to get a free valuation and start the process of selling your property quickly.
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Original Link: https://www.bbc.co.uk/news/articles/cmllreerzmro
