Housebuilder Bellway has revealed a drop in homebuyer demand and warned that sales volumes are set to remain largely flat over the year ahead due to rising interest rates and wider economic uncertainty.

The Newcastle-based group said weekly house reservations have fallen 12.4 per cent year on year to 191 in the nine weeks since August 1.

It said: “While Bellway entered the year with a strong forward order book, given the backdrop of rising interest rates and wider economic uncertainty, the board currently expects to deliver volume at a similar level to the prior year.”

It is also expecting a fall in average selling prices to around £300,000 from £314,399 in 2021-22, but said this largely reflects a higher proportion of social housing sales.

There have been gathering signs of a housing market correction as soaring mortgage rates and worries over the wider economy are set to push down on prices.

Halifax said earlier this month that average UK house prices fell by 0.1% in September, while the Royal Institution of Chartered Surveyors (Rics) warned last week that the market has lost momentum, with new buyer inquiries falling for the fifth month in a row.

Bellway sees buyer demand drop amid soaring mortgage rates and economic woes