According to the latest trading update for the year ended 30 June 2023 from Barratt Developments, this accounted for more than half of the decline in its total reservation rate.
However, it said that demand among existing homeowners was “more resilient”.
The company said that its net private reservation rate for the period was 0.55 per active outlet per week, which is a decrease of nearly a third compared to the same period last year.
It noted that since its last trading update to April 2023 its net private reservation rate stood at 0.67, which is down from 0.7 in the same period last year.
The housebuilder said that there were increased reservations into the private rented sector, primarily to Citra Living, and reservations of private units to social housing providers.
Home completions at over 17,000
The firm continued that total home completions came to 17,206, which is down from 17,908 in the same period last year.
Barratt said that its total average selling price for the year was £320,000, up from around £300,000 in 202.
Its total forward sales were pegged at around £2.2bn or around 9,995 homes, compared to £3.6bn last year,
Its adjusted profit before tax is expected to be “in line with current market expectations” at around £180m. This compared to £412.5m in the same period last year.
Barratt said that is operating from an average 367 active sales outlets, up from 332 last year but it expected that to fall by around six per cent in 2024 to reflect “both reduced outlet openings given our step back from the land market and the impact of sites ending where sales activity was extended by lower reservation rates”.
‘Significant macro-economic’ headwinds in the year ahead
Looking ahead, the firm said that there were “significant macro-economic headwinds” including persistent inflation and a higher interest rate environment.
The house builder said it expects total home completions to be around 13,250 to 14,250 for the year.
David Thomas, Barratt’s chief executive, said: “During a year of economic and political uncertainty, we have delivered a strong operational and financial performance, while maintaining our industry-leading quality, customer service and sustainability credentials.
“Whilst the trading backdrop has become more challenging in recent months, with many of our customers facing significant cost of living pressures, we have responded decisively – increasing our reservations into the private rental sector, using incentives for customers in a disciplined way, and flexing our build activity, land-buying and operating costs to reflect market conditions.”
He added: “As a result, we enter the new financial year in a robust financial position with a solid forward order book and we are ready to respond to any further changes in the housing market.”
