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Warnings cast cloud over UK housing market

Joanna Bourke
Parts of the UK housing market have been hit by weaker consumer confidence: Daniel Leal-Olivas/Getty Images

Fears over the health of the housing market deepened on Thursday as the UK’s largest estate agent warned on profits and a major housebuilder admitted sales have slowed.

Updates from agent Countrywide and builder Redrow on Thursday added more misery to a sector hit by a cocktail of falling consumer confidence, price falls and political uncertainty since Britain voted to leave the EU, while the Bank of England has also raised interest rates for the first time in a decade.

Countrywide, led by Alison Platt, said sales were down 7% to £175.1 million in the most recent quarter.

She added that the housing market “remains challenging and is likely to be down overall compared with 2016”.

Full-year profits will be at the lower end of the £74 million to £78 million range which analysts had pencilled in, sending the shares down as much as 5% at one stage.

Countrywide finance chief Himanshu Raja added: “Buyers are still waiting for prices to drop, while sellers are holding firm on pricing.”

Jefferies analyst Anthony Codling said: “The UK existing homes market has had a challenging year and we do not see much in the way of good news on the horizon.”

Elsewhere Steve Morgan — the chairman of FTSE 250-listed housebuilder Redrow — said “ongoing political and economic uncertainty” resulted in “a slight slow down in sales” in recent weeks compared with last year’s stronger market.

Although Morgan reckons the market can withstand last week’s interest rate rise, the Square Mile was unimpressed, and shares in Redrow lost 31p, or more than 4.8%, to 610.5p.

The City abandoned a number of housebuilding firms too, with shares in Barratt Developments, Bellway and Persimmon all falling.

The share falls came on the same day that the Royal Institution of Chartered Surveyors warned that house prices in Britain are no longer rising, and are falling in London at their fastest pace since 2009.

A survey by RICS showed that for homes worth more than £1 million, 71% of respondents reported sales prices coming in below asking prices.

In the £500,000 to £1 million bracket, 62% said prices were coming in lower than asking prices.

Simon Rubinsohn, RICS chief economist said: “The combination of the increased cost of moving, a lack of fresh stock coming to the market, uncertainty over the political climate and now an interest rate hike appears to be taking its toll on activity in the housing market.”

He added: “With both buyer enquiries slipping and sales expectations also subdued, the sense is that home owners are staying put and first-time purchasers are increasingly focusing on that part of the market which is supported by the Help to Buy incentive.”