Demand for new homes slows

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by Kay Murchie

Housebuilder Taylor Wimpey said as a result of increasing mortgage costs and the credit squeeze, demand for new homes is slipping.

The amount of prospective buyers visiting showhomes and reserving new houses has declined recently and the housebuilder anticipates sales to be down 5% compared with last year.

Peter Redfern, Taylor Wimpey’s chief executive, said an already restrained property market early in the summer was worsened by the turmoil in the financial markets. He added that people are more cautious about the level of mortgage payments they’re taking on.

Mr Redfern said prices were ‘stable’ and Nationwide reported a 1.1% increases in prices between September and October against 0.7% a month earlier. Nationwide said the average property price increased to £186,044, leaving the annual rate of growth at 9.7%, up from 9% in September but much less than its June peak of 11.1%.

Howard Archer of Global Insight said the leap in property prices in October is a real shock and significantly reduces the case for an interest rate reduction next week. It therefore supports our opinion that the Bank of England will not cut rates until February.

In early July this year, George Wimpey merged with rival Taylor Woodrow to create Taylor Wimpey.