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UK housebuilders still under severe pressure

In a worrying development for the UK housebuilding sector Redrow, one of the leaders in the UK, has announced a very gloomy forecast for the short to medium term with concerns that buyers are leaving the market in droves with at least 20% walking away from potential purchasers through Redrow over the last two months. The company has also confirmed that more than 50% of its sales outlets are failing to close even one deal a week.

The cancellation rate is the main concern as this tends to be an indication of consumer opinions in the short to medium term and with more than 20% walking away from previously agreed purchases the future looks very bleak indeed. As house prices continue to fall, unemployment in the sector continues to rise and profits are very few and far between the sector is nowhere near over the worst.

While a reduction in UK interest rates would be useful, it would only really be of any assistance to the housebuilding sector if mortgage lenders were to pass on savings to the consumer. As yet this has not happened and even though the government promised this on a number of occasions it is difficult to see how they can fulfil that promise.

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