Economic uncertainty is deterring buyers, says housebuilder Crest Nicholson

The construction firm downgraded its profit outlook for the year.

The house sector has struggled in recent weeks (Andrew Matthews/PA) (PA Wire)

A summer slowdown in the housing market forced Crest Nicholson to downgrade its profit outlook for the year as buyers are put off by the tough economic climate.

The housebuilder said that it had faced bad conditions, which got worse in recent weeks, as interest rates continue to rise.

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

This is because there are not many people selling at the moment, so the supply is low, 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 £50 million, from £73.7 million previously.

Shares in the company plunged by as much as 13.8% on Monday morning after markets opened.

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.

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“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% in August, the biggest fall in that month since 2018.