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Financial Times housebuilding story

ended 20. October 2023

A journalist at the Financial Times has asked Newspage to give her a few quotes on how builders are feeling about their business and the economy now that mortgage approvals and house prices are down, consumer confidence is weak and building and borrowing costs are up. Deadline is lunchtime today so go go go.

3 responses from the Newspage community

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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
With mortgage approvals and house prices trending downward, while building material and labour costs continue to rise, confidence is clearly wavering amongst developers. A lot of large developers have started land banking, waiting for the opportune moment to break ground. While smaller developers continue to carefully plough through the tough times as their exposure to a stockpile of consented sites is low. We are continuing to buy sites for development, however negotiations are a lot more intense these days.

The resurgence of 100% LTV mortgages for FTBs is comforting to see. A couple of lenders have boldly embraced this, signifying their confidence in the long term trajectory of property prices and interest rates. With us now being at the peak of the interest rate cycle there is a growing belief in the housing market's durability as rates begin to climb down. Remember that we still have an acute housing crisis in this country that is unlikely to be satisfied anytime soon.
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Dorian Payne
Managing Director at Castell Group
As a developer that specialises in social and affordable housing, the increase of building costs and borrowing costs is a major concern.

These increased costs can impact our ability to deliver homes at the affordable rates our communities need.

The viability of housing associations and providers is at risk due to the upward pressure on interest rates. This could potentially hinder our efforts to meet the growing demand for social and affordable housing, when we are already substantially behind delivery targets.
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Joe Garner
Founder & Managing Director at Joe Garner Consulting
House builders in the UK are grappling with a perfect storm of challenges. Rising mortgage costs, slowing house sale transactions, and low market confidence have created a bleak outlook for the industry.

One significant hurdle is the surge in mortgage costs. As interest rates climb, borrowing becomes more expensive, making homeownership less accessible. This has led to reduced demand for new houses, putting house builders in a tough spot.

The slowdown in house sale transactions exacerbates the situation. Economic uncertainty is causing potential buyers to delay or cancel purchases, leading to revenue losses for house builders and job cuts in related sectors.

Market confidence is at an all-time low due to Brexit, the ongoing pandemic, and regional property market bubbles. This has made prospective homeowners hesitant to invest in property, further diminishing demand for new homes.

Access to financing for new projects has also become a challenge.