Barratt warns of ‘uncertain’ year ahead as number of house builds falls
Housebuilder Barratt Developments warned that the outlook for the year remains uncertain as it continues to be battered by a tough buyer market offset by unruly inflation.
In the three months to October, the London-listed firm said it only built 9,221 homes down from 13,000 compared to the same period last year.
The value of these builds was totalled at £2.3bn, a near £1bn loss when compared to the £3.6bn figure it racked up from home completions in the exact same term the prior year.
Barratt said that the outlook for the year remains uncertain with the availability and pricing of mortgages “critical to the long-term health of the UK housing market”.
House buyers have been hesitant to enter the market since the fallout of last year’s mini budget and then the central bank’s 14 straight interest rate hikes, which have sent borrowing costs into a frenzy.
Just yesterday, rival Bellway blamed poor buyer sentiment for its 18.1 per cent fall in profit before tax £532.6m.
The FTSE 250 housebuilder said revenues also dipped 3.7 per cent to £3.4bn and housing completion fell 2.3 per cent to 10, 954 new builds in the term.
“We have continued to trade in line with the expectations set out in our announcement in September. The trading environment remains difficult, with potential homebuyers still facing mortgage challenges,” said David Thomas, chief executive of Barratt.
“Against this backdrop, we are focused on driving revenue whilst continuing to manage build activity and carefully control our cost base. As always, we remain focused on leading the industry in building high quality, energy efficient and sustainable homes for our customers.”
The company’s share price was down 1.63 per cent this morning as markets responded to news.
Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, said: “New home buyers are still exercising considerable caution, given the higher cost and reduced availability of mortgages. However, expectations for the year ahead already reflect this challenging backdrop meaning Barratt has maintained its full year targets.
“Barratt is doing all it can to weather the current storm in the housing market. The group has taken a knife to costs, has stepped back from land purchases and is offering greater incentives to buyers. The reality however is that there is so much out of its control. Its destiny depends to a considerable extent on housing market conditions.”