Rising mortgage rates and falling consumer confidence have contributed to a big slowdown in the UK housing market according to the boss of Britain’s biggest housebuilder.
Barratt chief executive David Thomas said the number of reservations for its new homes stood at 10,511 on New Year’s Eve 2022 – compared to 14,818 a year before.
The total value of those forward orders, the group said, was £2.5 billion. It had been almost £3.8 billion a year earlier.
Action the group has taken to address the market conditions has included significantly reducing land approvals, pausing recruitment and being more cautious about new site openings.
It said the rate of new reservations in the next three months would determine if further action was needed.
Assuming sales picked up in the spring the business said it would complete almost 17,500 new home sales. If things didn’t pick up, that figure would be closer to 16,000 or 16,500 sales.
However the Leicestershire-based housebuilder said the total new number of homes it built over the past six months – including joint ventures – was 8,626, which was up from 8,067 a year before.
It also said it was in a good financial position, with net cash of almost £1 billion, albeit down marginally on recent months.
The average Barratt home selling price increased by around £42,000 year-on-year to around £330,000 thanks, it said, to a positive mix of properties, more London completions and general house price inflation.
In a trading update, Mr Thomas said: "We have delivered a strong operating performance for the six months to 31 December 2022.
“This was possible because of our significant forward order book at 30 June 2022 and the tremendous efforts of our employees, sub-contractors and supply chain partners.
“The first half of the financial year has however 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.
“Our business remains fundamentally strong, both operationally and financially, with an experienced leadership team, a strong net cash position and a resilient and flexible business model.
“We are focused on successfully navigating the challenges ahead and continuing to deliver excellent quality and service for our customers."
Shares in Barratt were down around 1.5 per cent this morning at 417p. The group, which is based in Coalville, north west Leicestershire, includes Barratt Homes, David Wilson Homes and Barratt London as well as the Wilson Bowden commercial property arm.
