UK listed builders are on track to build the fewest new homes in a decade.

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Listed housebuilders in England are on track to build the fewest homes for sale in a decade as planning regulations and high mortgage rates hold the market back despite the new Labor government’s push to increase housing supply.

Excluding Vistri, which focuses on affordable and rental housing, the sector is expected to complete more than 50,000 homes this year, the lowest level of output since 2013, according to a Financial Times analysis of figures from seven companies compiled by Investec.

Vistry fell 17 percent on Tuesday as the company issued its third profit warning since October, citing “delays in expected year-end transactions and completions” and having to abandon deals because its financial terms were “not attractive enough.”

Rampant housebuilding contracts pose major challenge to Prime Minister Sir Keir Starmer’s Labor government Planning improvements For more than 50 years, in an effort to increase the construction of new houses to a higher level.

Ainsley Lammin, an analyst at Investec, said: “Listed players are broadly delivering their lowest closing levels for a decade.” “Both demand and supply factors” – including high loan rates making purchases difficult for first-time buyers – were behind the decline.

Labor plan reforms have been adopted by the construction sector, but stocks in the UK Home builders failed About a fifth since the Labor government’s budget was released in October, which raised concerns that the rebound in inflation and borrowing costs would last longer.

Vistri warned twice this year Unexpected construction costsIt cut its profit guidance by another £50mn on Tuesday to a total of £165mn for 2024. Lammin said the new warning would “damage the group’s credibility” and harm “more unsuspecting investors”.

The rest of the sector, including companies such as Barratt, Persimmon and Taylor Wimpen, are highly sensitive to borrowing costs this fiscal year due to concerns about interest rates.

Most of these companies’ customers rely on mortgage loans, and many are first-time buyers who stretch their budgets to the max. Loan rates have been higher than expected this year, averaging more than 5 percent, according to financial information provider Moneyfacts.

The results obtained in the listed seven Home builders It’s down 3 percent this year. In the year It follows a drop of a fifth in 2023 after the Conservatives’ “mini” budget in September 2022, which sent mortgage rates soaring and slammed the brakes on the property market.

The decline in new home completions at these companies – which also includes Bellway, Berkley, Crest Nicholson and MJ Gleeson – is part of a wider slowdown in housing production. Data tracking the overall supply of new homes showed 5 percent fewer homes completed in the first nine months of 2024 than a year earlier.

The industry is on track to complete around 220,000 new homes this year, according to estate agent Savills, far short of Labour’s target of £1.5mn over five years.

As sales continue to slow, homebuilders are scrambling to buy up land and open up new properties, reducing production to keep home prices from falling.

Many people in the field They hope 2025 will be the start of a recovery, with mortgage rates slowly falling and Labour’s building reforms starting to bear fruit.

RBC analyst Anthony Codling said: “The Labor government of 2024 is the house-building government we will remember.” “UK housebuilders oversold since Budget.”

Analysts and industry groups have warned that Labor could miss out on 1.5mn new homes unless it finds ways to help more stressed-out first-time buyers afford homes – and unless it gets much bigger funding for affordable housing.

But some industry executives are still bullish. Bellway chief executive Jason Honeyman told the FT on an October earnings call: “I’m fed up with whining.

“People wanted to complain about the old government, which didn’t want any new home. Now they want to complain about the new government because it wants to build more,” he said. “It’s a big thing. . . It will take some time for the home construction sector to start rebuilding.