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Listed UK housebuilders are on track to build the fewest new homes for sale in a decade, as planning rules and high mortgage rates keep the market under pressure despite pushing the envelope Labor government to increase housing supply.

The sector, excluding Vistry which focuses on affordable and rental housing, is expected to complete just over 50,000 homes this year, the lowest level of output since 2013, according to a Financial Times analysis in figures for seven companies compiled by Investec.

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

The rampant contracting of house building posed a major challenge for Prime Minister Sir Keir Starmer’s Labor government, which launched the sweep. planning reforms in an effort to boost the construction of new homes to its highest level in more than 50 years.

“Listed players have broadly delivered their lowest completions in a decade,” said Aynsley Lammin, analyst at Investec. He said “both demand and supply factors” – including high mortgage rates that make purchases more difficult for first-time buyers – are behind the collapse.

Labor planning reforms welcomed in the construction sector but divided in the UK the builders of the house fell by about a fifth since the Labor government’s Budget in October, raising fears of renewed inflation and borrowing costs that remain too high.

Vistry has warned twice this year about undercounted construction costsworth £165mn. It cut profit guidance for 2024 by another £50 million on Tuesday. Lammin said the new warning would “damage the group’s credibility” and “further scare investors”.

The rest of the sector, including companies such as Barratt, Persimmon and Taylor Wimpey, meanwhile suffered from post-Budget concerns about interest rates as they are very sensitive to borrowing costs.

Most of these companies’ customers rely on mortgages, and many are first-time buyers who stretch their budgets to the max. Mortgage rates remain higher than expected this year, more than 5 percent on average, according to financial information provider Moneyfacts.

Output of the seven listed home builders decreased by 3 percent this year. This follows a fifth drop in 2023 after the Conservatives’ “mini” Budget in September 2022, which led to a surge in mortgage rates and put the brakes on the property market.

The decline in new home completions by these companies – which also includes Bellway, Berkeley, Crest Nicholson and MJ Gleeson – is part of a wider decline in housing output. Tracking data on the total supply of new homes shows that 5 percent fewer homes were completed in the first nine months of 2024, compared to the same period last year.

The industry is on track to complete around 220,000 new homes this year, according to estate agent Savills, just short of the numbers needed to hit Labour’s target of 1.5 million over five years.

As sales declined, home builders pulled back from buying land and opening new sites, reducing their production and trying to avoid cutting the price of their homes.

Many in the sector hope that 2025 will be the start of a recovery, with mortgage rates expected to gradually fall and the possibility of Labour’s pro-building reforms starting to bear fruit.

“The 2024 Labor government is the most pro-housebuilding government we can remember,” said Anthony Codling, RBC analyst. “UK housebuilders oversold since Budget.”

Analysts and industry groups have warned that Labor is likely to miss its target of 1.5 million new homes unless it finds ways to help more first-time buyers. buy a home – and provide more affordable housing funding.

But some industry executives are still bullish. “I’m fed up with the whiners,” Bellway chief executive Jason Honeyman told the FT on an October results call.

“People wanted to complain about the old government, which didn’t want any new houses. And now they want to complain about the new government, which wants to build too many,” he said. “It’s ambitious. . . . The housing sector will take a long time to rebuild”.