Property Slump Forces Bellway to Cut 90 Jobs: Rising Mortgages Caused Demand for Homes to Plummet
One of Britain’s biggest builders is cutting jobs and has warned of a difficult year ahead as the property slump continues.
Painful increases in mortgage rates and the shutdown of the Help to Buy program in March have caused demand for homes to plummet.
Now Bellway is closing its South Midlands and London Partnerships divisions in a restructuring that will cost 90 jobs.
He warned that home sales would “decline considerably” over the next year.
Jason Honeyman, Bellway’s chief executive, warned: “Cost-of-living pressures have weighed on demand, and with affordability continuing to be constrained by higher mortgage interest rates, trading is likely to remain a challenge.”
Idle tools: Bellway is closing its South Midlands and London Partnerships divisions in a restructuring that will cost 90 jobs
He added: “Given the level of the order book and the low booking rates, legal completions are expected to drop considerably.”
In the 12 months to July, the value of its forward orders plummeted to £1.2bn, up from £2.1bn a year earlier, as weekly booking rates fell 28.4%.
House income fell 3.4 per cent to £3.4bn for the fiscal year, while its median sales price fell to £310,000 from £314,399.
A series of interest rate hikes over the past year has made many homebuyers’ dreams of owning their own homes unattainable.
The Bank of England achieved its 14th successive rate hike last week, raising the level to 5.25 percent.
Bellway is still trying to entice disillusioned buyers, bidding to pay up to £24,000 in mortgage payments for up to two years.
Mortgage rate increases in June and July hit demand particularly hard, Bellway added, as its share it fell 0.9 percent, or 20 pence, to 2,196 pence yesterday, down about 5 percent over the past year.
AJ Bell’s chief investment officer, Russ Mold, said: “Stocks are holding firm, so markets may have already priced in a lot of the bad news.”
There has been some optimism that the Bank of England may not need to raise its base rate much more given that inflation has eased this summer.
It fell to 7.9 percent in June, down from 8.7 percent 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 the big names TSB, Nationwide and HSBC.