Housebuilding falls sharply as mortgage rates rise | Business News

The latest construction PMI showed that housing construction in the UK contracted in June at the fastest pace since the 2009 global financial crisis, excluding the impact of the months leading up to the pandemic. go through Sarah Taff-Maguire, business reporter @taaffems Thursday 6 July 2023 at 12:59, United Kingdom British home construction fell by the most in more than a decade outside of a pandemic year, a closely watched survey showed, as high borrowing costs weighed on demand. The decline in homebuilding in June was “sharp and accelerated,” according to the S&P Global/CIPS Construction Purchasing Managers’ Index (PMI). Residential construction fell at the fastest rate since March 2020, when the country first entered a COVID-19 lockdown. Excluding losses from the lockdown, last month’s drop would have been the fastest since April 2009, when the economy reeled from the global financial crisis. Survey respondents blame Bank of England for high borrowing costs rate hike plan to respond Inflation remains high. A “lower” outlook for the housing market was also cited as a dampening factor. Samuel Toomes, chief UK economist at Pantheon Macroeconomics, said the rise in mortgage rates had “triggered a sharp downturn in housing construction”. “The construction PMI for June suggests that interest rates have now risen enough to push the sector into another downturn,” he added. House prices ‘depending on where interest rates go’ price It has been falling after rising sharply during the pandemic. However, weaker demand combined with fewer supply bottlenecks did help improve lead times for construction services and materials. New orders across the construction sector fell for the first time since January, the survey showed. A drop in home construction also drove down purchase prices, which fell for the first time in 12 years. read more: Rising wages outpace energy as ‘biggest driver of price increases’ Curry boss ‘remains wary’ of economic optimism as overall profits fall This is a limited version of the story, so unfortunately this content is not available. open full version While homebuilding slowed, construction firms said they had increased work on infrastructure projects. The industry’s best-performing field was civil engineering, where business activity grew at the second-fastest pace since June 2022.

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