Barratt Developments, the largest housebuilder in Britain, has reported a significant 75% decline in annual profit, alongside a notable drop in home completions, following a challenging year for the industry. The company’s pre-tax profits fell to £171 million for the year ending in June, down from £705 million the previous year. This steep decline highlights the difficult conditions affecting both housebuilders and potential buyers in the UK housing market.
During this period, Barratt completed 14,004 new homes, representing an 18.6% decrease from the previous year’s 17,200 completions. The company has indicated that this number may decrease further, projecting between 13,000 and 13,500 home completions for the upcoming financial year. The struggles in the housing market are attributed to several factors, including the cost of living crisis, significantly higher mortgage rates, and weakened consumer confidence. These challenges have dampened demand and made it increasingly hard for potential buyers to enter the market.
Despite these disappointing results, Barratt remains optimistic about the future. The company has expressed support for the Labour government’s proposed planning reforms, which aim to reintroduce mandatory housing targets and streamline bureaucratic processes. These reforms are viewed as essential for unlocking economic growth and addressing the chronic undersupply of new homes in the UK.
Additionally, Barratt has reaffirmed its commitment to a £2.5 billion takeover of rival Redrow, despite concerns from the Competition and Markets Authority (CMA). The company is actively working with the CMA to secure competition clearance. As the housing market continues to face hurdles, particularly concerning mortgage pricing and availability, Barratt emphasizes its strong balance sheet and solid forward sales position, allowing it to approach the new year with confidence despite the uncertain economic environment.
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