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Barratt to slow down housing delivery due to mortgage ‘sensitivity’

  • 10/07/2024
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Barratt to slow down housing delivery due to mortgage ‘sensitivity’
Barratt Developments said it would develop fewer homes next year, citing a “challenging” backdrop and “sensitivity to current mortgage pricing and availability”.

In its trading update, the housebuilder said it anticipated total home completions to be in the range of 13,000-13,500 in 2025, including around 600 completions from joint ventures. 

This was below the 14,004 homes it completed in 2024, which was also 18.6% down on the previous year’s 17,206 completions. 

Barratt attributed this to a lower order book and muted demand in the first quarter of its 2024 financial year. 

The average selling price of Barratt’s homes was around £307,000, down from £319,600 in 2023. 


Easing mortgage rates encourage demand 

Barratt said underlying sales activity was impacted by mortgage rates and affordability, but its reservation rate improved as pricing began to fall from August 2023 onwards. 

Its net private reservation rate was 0.58 per active outlet per week in 2024, a 5.5% increase on the previous year’s rate of 0.55. 

Barratt said there was also improvement in first-time buyer activity, which accounted for 27% of private reservations. This was up from a share of 25% in 2023.

Demand from existing homeowners was also resilient, Barratt said, with higher use of sales incentives and part exchange. 


The challenging environment continues 

The firm reported a “strong operational performance” despite the challenging year, and as a result would deliver a pre-tax profit that was ahead of expectations. 

Barratt welcomed the government’s “urgency and focus” on housebuilding and reform of the planning system and said it looked forward to working with the government to deliver more homes of all tenures. 

David Thomas, chief executive of Barratt Developments, said: “During another year of economic and political uncertainty, we have delivered a strong operational performance, reflecting the exceptional work of our employees, sub-contractors and suppliers, and their commitment to delivering high-quality homes that people want to live in. 

“Whilst we continue to navigate a challenging macroeconomic backdrop, we are delivering industry-leading build quality, sustainability and customer service. Combined with the strength of our balance sheet, this has ensured we remain resilient and responsive through the cycle.” 

He said he was “pleased” that the firm’s merger with Redrow was supported by shareholders and subject to approval by the Competition and Markets Authority (CMA), and looked forward to “bringing together two businesses to create an exceptional UK housebuilder, ensuring we are well-positioned for the future”. 

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