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Housing construction fell for the 11th straight month as demand for new homes fell - Worldtimetodays

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Housing construction has fallen for 11 straight months as high borrowing costs hit demand for new homes.S&amp;P Global said its index of activity in the UK construction sector – where readings below 50 indicate decline – was 45.6 in October.That’s up slightly from 45 in September, but still the second weakest reading since May 2020, during the height of the Covid-19 pandemic.The slump was greatest in residential construction, followed by civil engineering.The analysis group’s report noted “signs of stabilization” in commercial construction.Slowdown: S&amp;P Global said its index of activity in the UK construction sector – where readings below 50 indicate a decline – was 45.6 in October“Declining work on residential construction projects was largely linked to a lack of demand and subsequent cuts in new projects,” the report said.On the positive side, the cost of doing business for construction companies fell at its fastest pace in 14 years as prices for materials such as wood and steel, as well as transportation, fell.The Bank of England has raised interest rates from a record low of 0.1 percent to a 15-year high of 5.25 percent since December 2021 in a bid to control inflation.This has caused mortgages to rise and although it is hoped that interest rates have peaked, they are not expected to come down until well into next year.Higher borrowing costs have slowed the real estate market, causing developers to scale back their construction plans.John Glen, chief economist at the Chartered Institute of Procurement &amp; Supply, said: “The silver lining is that high borrowing costs are having the intended effect and curbing rising inflation.”“However, there is no doubt that the UK construction sector is in a difficult period and there are likely to be further challenging months ahead.”Profits for Britain’s biggest housebuilders are expected to fall by £2 billion this year. The biggest listed residential developers reported combined profits of £4.7bn last year. However, according to analysis by the Mail, this figure is expected to almost halve to £2.5bn. Persimmon will publish its latest trading update today and Taylor Wimpey on Thursday. Builders are selling fewer homes after the Bank of England raised interest rates to a 15-year high, driving up mortgages. Analysts said homebuilders would “batten down the hatches and weather the storm.”Some links in this article may be affiliate links. If you click, we may receive a small commission. This helps us finance This Is Money and keep it free to use. We don’t write articles to promote products. We will not allow a commercial relationship to compromise our editorial independence.

Housing construction has fallen for 11 straight months as high borrowing costs hit demand for new homes.S&amp;P Global said its index of activity in the UK construction sector – where readings below 50 indicate decline – was 45.6 in October.That’s up slightly from 45 in September, but still the second weakest reading since May 2020, during the height of the Covid-19 pandemic.The slump was greatest in residential construction, followed by civil engineering.The analysis group’s report noted “signs of stabilization” in commercial construction.Slowdown: S&amp;P Global said its index of activity...

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Housing construction fell for the 11th straight month as demand for new homes fell - Worldtimetodays

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