Housing Demand Wanes As Buyers Bank On Rate Cut
House buyers are putting off purchasing a new home until the Bank of England cuts interest rates, evidence suggests.
UK housebuilder Crest Nicholson was forced to issue a profit warning after it said sales momentum had softened since Easter due to volatile mortgage rates as well as buyers now expecting borrowing costs to drop later this year.
Meanwhile, a survey of chartered surveyors found that demand for homes had weakened in May.
Financial markets are forecasting that the Bank of England could cut interest rates in August or September.
Crest Nicholson reported a pre-tax loss of £30.9m for the six months to the end of April, including the impact of exceptional costs, compared to a £28.4m profit over the same period last year.
The housebuilder said that while "the spring selling season started well", it added: "Momentum has softened slightly since Easter, reflecting the volatility in mortgage rates and the expectation of a base rate reduction coming later in the year than previously expected."
A survey by the Royal Institution of Chartered Surveyors (RICS) found that demand had weakened in May.
Tarrant Parsons, senior economist at RICS, said a recent recovery in the housing market "appears to have slipped into reverse of late" which he blamed on higher mortgage rates in the past couple of months.
However, he predicted that this was "delaying, rather than derailing, a modest improvement going forward".