[ad_1]
The risk of higher mortgage rates following the war in the Middle East is likely to cool demand for new homes and cause a slowdown in activity from housebuilders, according to Savills.
The estate agent said the conflict has generated greater uncertainty and a risk that inflation will rise, which feeds into rising interest rates.
Developers and buyers are now grappling with the rising cost of borrowing, added the group in a quarterly update on housing supply.
Sales rates have already softened, particularly in Southern England.
Higher borrowing costs will also dampen buyer demand further and reduce the likelihood of sales rates improving in the short term, Savills added.
It comes as lenders have sharply increased rates this year, with the average two-year fixed rate rising to 4.8% in mid-April from around 3.6% in mid-January.
The big BTL planner: Key dates landlords need to know
Sponsored by BM Solutions
The Bank of England is now not expected to reduce the base rate this year, according to forecasts from Oxford Economics, in a reversal of the two rate cuts predicted before the war broke out.
The long-term impact will be determined by the duration of the disruption, the level of inflation, and how soon the bank can return to cutting rates, Savills said.
By comparing the number of homes granted planning permission with the number being completed, Savills said it can roughly gauge whether supply is growing or falling.
In the year to Q1 2026, six out of nine English regions granted consent for fewer new homes than were completed, indicating that the pipeline of new homes is likely to contract.
The report also showed that the top 10 housebuilders make up nearly two-thirds of housing supply.
Planning delays are one of the top barriers to development.
There were 204,500 homes built in the 12 months to March 2026, according to Energy Performance Certificate (EPC) data.
This falls short of the 367,000 needed to meet the government’s calculation of housing need in England.
[ad_2]
Source link
