Housebuilder says prospect of public sector cuts is affecting buyer confidence

Looming public sector cuts are leading to lower new homes sales and sites visitors, according to housebuilder Bellway.

In an interim management statement to the city today the builder became the first to signal a negative impact on the market explicitly due to the prospect of public sector job cuts by the new coalition government. The builder declined to put a number on the impact in sales, but said that rates had dropped “slightly” on the 100 sales per week it had been achieving since the new year.

However the builder insisted overall the firm had already secured this year’s original target of matching last year’s sales, and was likely to beat this by about 200 units by the time of the end of year at 31 July.

Chief executive Jon Watson said: “We’ve had a slight reduction in our 100 sales per week - I’m not going to give you a number, but it’s not down to fifty or anything. And we’ve had fewer round to visit sites.

“Housing is a confidence thing, and I think there’s enough out there in the news to damage that confidence. We’ve been a bit buffeted by the talk of cuts here and closures there.”

Housing is a confidence thing, and I think there’s enough out there in the news to damage that confidence

Chief executive Jon Watson

In addition he said there was currently a “hiatus” in council planning departments as they digested the meaning of a direction by Communities Secretary Eric Pickles to disregard regional plans.

However Watson played down the severity of both situations, saying it was far too early to say whether both were just temporary problems. “To me it looks like what has happened is that because of a few issues - the election , the world cup - the normal effect of a UK summer has come a bit early. We’ll know what’s happening when we get to the end of August. I’m not saying we’re heading for a double-dip.”

Bellway’s statement said it had already taken 1,800 reservations for next year, and cancellation rates had remained stable at around 13%. It has also spent £151m on unconditional land purchases, buying up 2,475 plots, and got conditional contracts or heads of terms on a further 5,275.
Estate agency Savills has recently revised it’s house price projections downwards in response to the new outlook, predicting falls of between 3% and 7% across the country.

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