Bellway, one of Britain’s biggest housebuilders, has said it is cutting jobs as it anticipates a property market slowdown in the coming year because of higher mortgage rates and the closure of the help-to-buy programme in March.
The construction company said it would shut two of its divisions and slow activity in a third, as it predicted that house completions would “decrease materially” over the next 12 months.
As demand for houses has fallen sharply, with higher interest rates making a home purchase unaffordable for many, Bellway has decided to close its South Midlands and London Partnerships divisions, and reduce production in its Durham business. The sites in those divisions will be transferred to other businesses.
Bellway will also reduce its 3,000-strong workforce and began consulting on the job cuts on Monday. A spokesperson declined to specify how many jobs would go, but said it would be a “very small percentage overall”.
Mortgage payments for households have risen sharply in response to higher interest rates. Last week the Bank of England instituted its 14th base rate increase in a row, taking the figure to 5.25%, and predicted borrowing costs would stay high for at least the next two years. The average two-year fixed residential mortgage rate is now 6.83%, according to Moneyfacts. Bellway is using more incentives to lure buyers, such as a mortgage offer at the start of the year, which paid up to £24,000 towards mortgage payments for up to two years.
Jason Honeyman, Bellway’s chief executive, said: “The backdrop of macroeconomic uncertainty and cost of living pressures affected consumer demand during the year and, given affordability remains constrained by higher mortgage interest rates, underlying trading conditions are likely to remain challenging in the near term.
“In the current financial year, given the level of the order book and prevailing low reservation rates, legal