Barratt sees 'marked slowdown' in UK housing market

Barratt Developments flagged a more uncertain outlook on Wednesday following a "marked slowdown" in the UK housing market.

Updating on trading, the blue chip housebuilder said total home completions rose by 6.9% in the six months to 31 December, at 8,626.

The total forward order book, however, was 10,511 homes, against 14,818 a year previously, at a value of £2.54bn compared to £3.79bn at 31 December 2021. The sales rate was 0.44 net private reservations per active outlet per week, against 0.79 a year previously.

David Thomas, chief executive, said: "The first half of the financial year has seen a marked slowdown in the UK housing market.

"Political and economic uncertainty impacted the first quarter; this was then compounded by rapid and significant changes in mortgage rates, which reduced affordability, homebuyer confidence and reservation activity through the second quarter."

He added that the businesses remained "fundamentally strong", with a strong net cash position and a "resilient" business model.

But Barratt conceded that the outlook for the rest of the year was "uncertain", noting. "Our full-year out-turn will depend on how the market evolves in the early months of 2023.

"Assuming net reservation rates increase in line with normal spring trading patterns, to around 0.5 homes per active outlet per week, we will remain on track to deliver consensus total home completions of 17,475."

Should that not happen, home completions would likely be significantly below forecasts, at between 16,000 and 16,500, it added.

Liberum, which has a ‘buy’ rating on the stock, said: "Although the sales rate was weak in the first half, as expected, Barratt delivered a good outcome.

"We are encouraged that mortgage rates are falling, and that confidence should improve as inflation peaks. The stock market continues to discount a much worse outcome than we think is likely."