The UK’s largest housebuilder Barratt Developments has warned of a tough environment, with potential homebuyers still struggling to secure an affordable mortgage.
With home reservations taking longer, Barratt saw forward sales drop to 9,221 in the three months to 8 October from 13,314 for the same period in 2022.
Forward sales at £2.4bn are worth £800m less than last year.
Barratt CEP David Thomas said the outlook for the year ahead remained “uncertain with the availability and pricing of mortgages critical to the long-term health of the UK housing market”.
He said the focus during FY24 will remain the same – to drive revenue through targeted use of incentives, whilst continuing to manage build activity and controlling the cost base.
Barratt continues to expect to deliver total home completions of between 13,250 and 14,250 homes in FY24, including around 650 home completions from its JVs and around 750 completions for the private rental sector. All other guidance from its FY23 results in September 2023 also remains unchanged.
Thomas stressed that reservation activity had continued to reflect the mortgage challenges faced by potential homebuyers, as well as the absence of Help to Buy reservation activity which accounted for 12% of private reservations in the prior year period.
“We have continued to focus on driving revenue through multi-unit sales to the private rental and affordable housing sectors and the continued use of sales incentives for private customers.
He added: “Whilst we expect that the backdrop will continue to be difficult over the coming months, we are a resilient business with a strong balance sheet and a highly experienced management team.”
The ONS today reported latest UK house price figures which indicated the tough climate that both buyers and builders face.
Atom Bank head of mortgages Richard Harrison said: “[House] prices continue to rise more slowly, with today’s data reflecting the challenging time the property market has experienced so far in 2023, with rising rates negatively impacting how much buyers are able to borrow as well as customer confidence.
“As a result, activity in the market has remained subdued and the latest Bank of England approval figures point to a marked reduction in purchase activity, with August’s numbers some 37% lower than the same period last year”.
