The outlook for the year remains “uncertain”, housebuilder giant Barratt Developments warned as it reported a fall in reservation numbers and tumble in the value of its forward order book.
David Thomas, chief executive of Barratt which is Britain’s largest housebuilder, said: “The trading environment remains difficult, with potential homebuyers still facing mortgage challenges.”
Between July 1 and October 8 the FTSE 100 company saw net private reservations (excluding joint venture sites) per average week of 169. That was down from 188. Forward sales, including through joint ventures, stood at £2.36 billion (9221 homes) at the period end, compared with £3.6 billion (13,314 homes) a year earlier.
Much of the industry has seen demand dented this year as would-be buyers are squeezed by much higher mortgage costs and interest rates, and after the withdrawal of the Help to Buy scheme made affordability even harder for many first time purchasers.
The housebuilder said it has continued to focus on driving revenue through multi-unit sales to the private rental and affordable housing sectors, as well as the continued use of sales incentives for private customers.
Barratt stuck with its July guidance and expects home completions in the year to June 2024 to be between 13,250 and 14,250. In the prior 12 months the company built 17,206 homes.
The firm said: “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.”
Barratt added: “Our focus during FY24 will remain driving revenue through targeted use of incentives, whilst continuing to manage build activity and control our cost base. This will be supported by our highly selective approach to land buying whilst continuing to lead the industry on sustainability.”
Investec analyst Aynsley Lammin said the update “confirms a difficult, weak autumn trading season which is consistent with what we have heard recently from peers”.
