A major new housebuilder survey conducted by Knight Frank has found that concerns are growing over the short-term outlook for the UK economy.

Knight Frank interviewed 47 national and SME housebuilders who combined build around 20,000 homes per year. Just over 40% of respondents said that the short-term outlook for the UK economy had been the most challenging factor for their business in Q2, up from 20% who cited this factor in Q1. Likewise, 44% selected ‘mortgage availability and cost for purchasers’ as the most challenging factor, up from just 15% in the first quarter.

The outlook for the economy has also impacted how land deals are structured. Over 40% of housebuilders said they had been involved in a conditional land purchase in the second quarter, another 40% had agreed a purchase with a deferred payment structure, a quarter said they had renegotiated a purchase, and a fifth said they had either withdrawn or deferred a purchase.

Justin Gaze, head of residential land at Knight Frank, said: “We have seen more muted interest in land this quarter on the back of a weaker housing market and the challenging economic backdrop. Uncertainty over sales values and the rates of sale, particularly given high funding and development costs means the market is having to adjust accordingly. This greater caution has led to a preference for deferred payment structures, renegotiations and developers deferring purchases.”

Looking ahead, over half also thought that ‘mortgage availability and cost for purchasers’ would have the greatest impact on the housebuilding sector in the third quarter, second to planning delays. Of those surveyed, 60% said they expected start volumes to fall over the next three months (July to September) and over half said they thought land prices would fall over this period.