MJ Gleeson has become the latest housebuilder to see higher borrowing costs dampen demand for new homes, as the proportion of first-time buyers shrinks.
The low-cost builder, whose homes start from about £116,000, said it sold fewer properties in the year to the end of June.
It completed the sale of 1,723 homes in the latest financial year, compared to 2,000 the previous year.
The reduction in house sales reflected the downturn in the wider economy and the immediate impact of higher mortgage rates on buyers’ confidence, the company said.
It comes as the Bank of England pushed up UK interest rates to 5% last month, the highest level in 15 years. Millions of mortgage holders are set to see their monthly payments increase when their fixed-rate deals expire over the next year.
It also means first-time buyers face much higher borrowing costs, with the average five-year fixed-rate deal surpassing 6% earlier this week, according to Moneyfacts.
MJ Gleeson also said the average selling price of new homes had gone up in the latest year, largely because of a shortage of properties on the market and because builders’ material and labour costs went up over the period.
The average selling price of a home sold by the firm increased by 11.3% year-on-year to £186,200, from £167,000.
It also flagged a significant shift in the age demographic of its typical buyers in the second half of the financial year. First-time buyers accounted for about 50% of open market reservations, compared to 71% in the same period last year.
Whereas the proportion of buyers over the age of 55 doubled, from 10% last year to 20% this year, it said.
But the builder said its houses are becoming more appealing to buyers who would have previously bought a more expensive home, as household incomes are squeezed.
The company said: “Looking ahead, whilst the board believes that demand from first-time buyers will continue at the levels seen through the last few months, it anticipates that interest from other value-driven buyers will increase as purchasers look to take advantage of Gleeson’s more affordable price points and high quality.”
On Thursday, a closely-watched survey by S&P Global and CIPS found the construction sector declined last month, with housebuilders seeing demand for residential homes fall sharply.
