Investors are shying away from the property market as housebuilders report a slump in profits and warn of a ‘lack of urgency’ among buyers.

The FTSE 100 saw a drop yesterday, largely driven by housebuilders who are feeling the pinch from rising interest rates.

Berkeley’s Warning: A ‘Lack of Urgency’

Berkeley Group, a major player in London and the South East, reported a worrying 8% fall in pre-tax profits to £557 million. While the company sees “signs of improvement”, CEO Rob Perrins says the market is stuck in a holding pattern until interest rates start to fall.

This warning sent shockwaves through the market, with other housebuilders following suit:

• Persimmon: Down 2.8%
• Taylor Wimpey: Down 2.5%
• Barratt: Down 2.7%

This slump is directly linked to the recent rise in interest rates. Potential buyers are holding back, waiting for borrowing costs to become more manageable.

Inflation Casts a Shadow on Rate Cuts

The recent inflation figures have further dampened hopes of a summer rate cut. This news has added fuel to the fire, leaving investors and developers with a sense of unease.