The lack of mortgage financing is hitting the market, Redrow says
House builder Redrow has added to the gloom surrounding the housing market by reporting rising cancellation rates.
It said cancellation rates have been running at just over 20%, but have risen sharply since Easter.
Redrow added that both sales and prices have come under pressure as a result of the tough market conditions and the restrictions on mortgage finance.
The firm said its order book at its homes operations was down 26.5% from a year earlier by the end of April.
"It is becoming increasingly difficult to predict accurately reservation and cancellation rates," Redrow said.
The firm said net reservations to date were nearly 50% lower in the period between 1 January, 2008 and 12 May, 2008 than they were the year before.
Redrow said the lack of mortgage availability had been a major factor in the slowdown and that in the short term it would focus on controlling costs.
The firm added it would continue to take a "very selective approach to land transactions until the housing market become clearer".
Given recent trading, Redrow said that completions in its homes operations were expected to be 10% lower that its previous estimates for the current financial year.
Redrow was not alone. Another property developer to warn of a slowdown on Tuesday was Galliford Try.
"Markets for the group's housebuilding division have been difficult throughout the spring selling season" said Galliford, adding that the environment had deteriorated sharply as the availability of mortgage finance for homebuyers reduced.
All the main UK property surveys have indicated that house prices have been falling in recent months.
On Tuesday, a survey from the Royal Institution of Chartered Surveyors (Rics) found 68% more surveyors noted a fall rather than a rise in new buyer enquiries during April, compared with 51% in January.