Labour battle fuels housebuilding crisis: Vistry shares crash as projects put on hold and Savills and RICS warn
Britain faces a deepening housing crisis as conflict in the Middle East and Labour’s civil war drive up mortgage costs and hit demand.In a bleak update to the stock market that sent shares crashing to a 15-year low, builder Vistry warned of sharply lower profits and revealed it is delaying some projects.At the same time, estate agent Savills said it has seen ‘greater caution among both buyers and sellers since the onset of the Middle East conflict’.And a report by the Royal Institution of Chartered Surveyors (RICS) warned the market remains ‘subdued’ as ‘higher mortgage rates continue to dampen buyer demand’.The triple-whammy threatens to leave Labour’s pledge to oversee the construction of 1.5m homes in this Parliament – or 300,000 a year – in tatters.And with doubts over Keir Starmer’s future creating fresh ructions on the bond markets, experts warned rising gilt yields will result in more expensive mortgages, hitting demand. Housing slump: Doubts over Prime Minister Keir Starmer’s future have created fresh ructions on bond markets with experts warning rising gilt yields will result in more expensive mortgagesAndrew Wishart, senior UK economist at banking group Berenberg, said a new prime minister who loosened the purse strings ‘would run the risk of losing investors’ confidence, triggering an inflationary plunge in the pound and a sharp rise in gilt yields and mortgage rates’.Tom Bill, head of UK residential research at Knight Frank, suggested the turmoil was already affecting the market.‘After mortgage costs were pushed higher by the Middle East conflict and associated energy price shock, the prospect of a new Government to the left of Keir Starmer brings inflationary concerns and has squeezed buyers further,’ he said.Vistry, whose brands include Bovis Homes, Linden Homes and Countryside Homes, expects first-half profits ‘to be significantly lower’ than last year after it slashed the price of its new-builds to boost sales. Sales are around 30 per cent higher than last year as a result. But it has taken its toll on profits – sending shares down 13 per cent to a 15-year low in early trading.The stock later closed down 12.3 per cent, or 40.2p, at 285.6p – taking losses for the year to 55 per cent.Vistry said it was ‘delaying or slowing the building of some sites’ as it seeks to boost cash flow and cut debt.It follows gloomy updates from rivals amid subdued demand and the rising cost of energy and materials, which has made building more expensive. The latest monthly health-check by RICS added to the gloom, with estate agents warning of lower prices, sales and enquiries.Tarrant Parsons, head of market research at RICS, said the report pointed to ‘a housing market still in the grip of macro headwinds stemming from the Middle East conflict’.Tomer Aboody, director of lender MT Finance, said: ‘Higher mortgage rates, lack of confidence in the Government, global conflicts and the soaring cost of living are having a negative impact on the market, as both buyers and sellers alike think twice about making a move.’DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Labour battle fuels housebuilding crisis: Vistry shares crash as projects put on hold and Savills and RICS warn
