Persimmon has warned of falling property sales on the back of higher mortgage costs and the wider economic slowdown.

The housebuilder plans to develop fewer homes after seeing a notable fall towards the end of last year.

Persimmon has said that existing sales of its homes had dropped by more than 36% and that 2023 will be beset by a weak economy.

Weaker consumer demand in the second half of 2022 resulted in sales dropping from £1.6bn in the previous quarter to £1bn in the final three months of the year.

Persimmon Group chief executive, Dean Finch, said: “Taking together the absence of Help to Buy and the increase in mortgage rates, we estimate that the monthly cash cost of mortgage payments for some first time buyers has approximately doubled over the past year compounded by limited availability of high loan to value mortgages.

“While we are promoting initiatives to stimulate demand, including the recent launch of our ‘10 months mortgage free’ customer offer, which generated a strong increase in website enquiries in its first week, it is too early to predict when there will be a recovery in demand.”

According to yesterday’s trading update, Persimmon’s cash total at the end of the fourth quarter stood at £860m, down from £1.25bn in the previous period.