Interest in homebuying dipped in April and May, says Bellway
Interest in homebuying dipped in April and May in response to a jump in mortgage rates, and building costs have climbed following the Middle East energy shock, according to housebuilder Bellway.
The Newcastle-based company said recovery in the housing market could slow as a result of the challenges.
Mortgage rates shot up following the onset of the US-Israel war with Iran at the end of February and many mortgage deals were pulled amid financial uncertainty prompted by the conflict.
This led to a slowdown in customer demand for homebuying followed by a positive start to the spring season, Bellway said.
Private reservations for new homes decreased to 151 per week between February and May 29, down from 161 in 2025.
Meanwhile, higher fuel and energy prices following the conflict have been pushing up the cost of building materials, according to the company.
It noted that some suppliers had introduced surcharges in a bid to cover the increased costs.
Chief executive Jason Honeyman said: “Bellway continues to perform robustly in an increasingly challenging market, with customer demand having moderated in recent weeks, after a positive start to the spring selling season.
“The outlook beyond the current financial year remains uncertain, reflecting ongoing geopolitical tensions in the Middle East and a less predictable domestic political environment.”
Bellway said it was still expecting to build between 9,300 and 9,500 homes over the 2026 financial year to the end of July.
This would be more than the 8,750 homes completed the previous year.
It was also sticking to previous expectations of reporting an underlying operating profit of between £320 million and £330 million.
Richard Hunter, Head of Markets at interactive investor, commented: “With the housebuilding sector remaining on shaky foundations, Bellway has provided some grounds for optimism by managing some of the levers within its control.
“In order to maintain cash generation and asset turnover, the group is looking to unlock some of the value from its strategic land bank. This follows the vital spring selling season which started brightly, but where customer demand waned over recent weeks given rising mortgage rates, as evidenced by a decline of 6.2 per cent in private reservation rates for the period.
“This is confirmation of what has been a torrid time for the housebuilding sector and Bellway is no exception. Higher for longer interest rates have joined a list of headwinds, such as consumer sentiment which has been in the doldrums for some time.
"In addition, there have been increasing calls from the sector for the government to accelerate the proposed relaxation of planning regulations, which is far from taking full effect.
"There are also general affordability concerns, particularly for first-time buyers, which need to be addressed to give this cyclical sector an overdue boost.”
Duncan Ferris, of the investment platform Freetrade, said:
“Bellway has kept its guidance intact, but the foundations are looking more fragile as the business faces an increasingly fraught trading environment.
“The conflict in the Middle East continues to cloud the outlook, while elevated mortgage rates are weighing on near-term demand. This has left the company’s forward order book and private reservation rates lagging behind the same point last year.”