Economic uncertainty is deterring buyers, says house builder Crest Nicholson

It said that when homes sell, the prices have not changed much.

There is a relatively small number of people selling at the moment, so the supply is low, which is helping to keep prices higher.

Meanwhile, despite economic problems in the country, few homeowners are being forced to sell because they are in financial distress.

“Against a backdrop of persistently high inflation and rising interest rates, trading conditions for the housing market have worsened during the summer of this year,” the business said on Monday.

“While pricing has remained resilient in a market with limited supply and few distressed sellers, the economic uncertainty is deterring prospective home movers.”

As a result, the company downgraded its pre-tax profit expectation for the year ending October 31, to £50m from £73.7m previously.

It added: “Additional mortgage borrowing for those looking to upgrade or for those with low levels of equity, notably first-time buyers, has become significantly more expensive with no Government support (following the end of Help to Buy) now in place to cushion this impact.

“Transaction levels across the industry have therefore weakened further, particularly in recent weeks.

“Although overall inflation is encouragingly starting to fall, core inflation and wage inflation both remain high with further interest rate rises forecast over the coming months.”

It came as separate figures from online property company Rightmove said that house prices were beginning to slide as sellers become more realistic about what they can expect to get.

Average asking prices fell 1.9 per cent in August, the biggest fall in that month since 2018.

Richard Hunter, Head of Markets at interactive investor, commented: “A profit warning from housebuilder Crest Nicholson prompted a further sell-off across the beleaguered sector, with the likes of Taylor Wimpey, Persimmon and Barratt Developments all in the firing line as the sellers took aim.

“It also serves as a reminder that higher mortgage and interest rates are beginning to gain some traction which unfortunately comes at a time when the broader economy is posting little more than anaemic growth.”

Mr Hunter said the markets were experiencing a “summer torpor”, with US markets largely flat on the day but down for the week.

He added: “In a potential sign of things to come, strength in the energy and defensive sectors in the S&P500 offset further weakness in the mega cap technology stocks.

"Investor indifference remains clearly visible in UK markets also, with the main indices unable to shake off the limitations of its own potential economic growth. The FTSE100 has slowly become bereft of international interest, with any earlier gains totally erased and with the index standing down by 2.5 per cent so far this year.”