Labour’s ambitious plan to “get Britain back building” has been dealt a major blow after one the country’s largest developers announced that it would be building fewer homes over the next year.
Barratt Developments is expecting to deliver 13,000-13,500 apartments and houses from now until the end of 2025. This is down from 14,004 in the previous year. Barratt has already produced its lowest output in a year since 2013, except for the lockdown-hit years of 2020.
Sir Keir has promised to construct 1.5 million homes in the next five year to help ease the UK housing shortage. He will be relying on major housebuilders such as Barratt to provide the majority of these homes.
Barratt has slowed the opening of new sites in the face of the slowdown in the housing market over the last 18 months. It is waiting to sell its existing flats and homes. The drop in sales has led to the company buying less land.
It has, as a result, 326 outlets in operation across the country – 63 less than last year at this time. Barratt has seen its forward order book drop from £2.22billion last summer to £1.91billion.
Barratt’s shares fell 6p or 1.2% to close at 485p as the volume guidance for next year was 7 percent below what the City had planned.
Anthony Codling, a RBC industry analyst, said that Barratt’s relatively small land bank was limiting its ability to build homes. He said that Barratt could build houses very well but lacked the land to do so.
Barratt already has a deal in place to purchase Redrow, a rival developer, giving it access to more land. The merger has been approved by both parties’ shareholders. is currently being examined the Competition and Markets Authority. Barratt hopes to get the green light next month.
Barratt Developments, founded in 1953 by an accountant from northeast England, Sir Lawrie Barratt who couldn’t afford to purchase a house so decided to build one. In 1968, it was listed on London Stock Exchange and is now a FTSE 100 member.
It benefited, like all builders, from the housing boom of the pandemic, but sales have dropped sharply in the last couple of years due to the cost of living crises, record prices of houses and higher mortgage rates.
David Thomas, Barratt’s chief executive, admitted that he and the rest of his team were “continuing to navigate” a difficult macroeconomic background. Barratt sold 0.58 homes on average per site each week over the last year. This is a slight improvement from the 0.55 rate of the previous 12 month period, but it’s still less than half the sales during the pandemic.
Thomas, 61 said that would-be purchasers have “remained sensitive” to mortgage availability and affordability, although the easing in mortgage rates during the last six months, along with “continuing high levels of sales incentives”, and a trimming of prices, has helped recover demand. The average Barratt house sold last year for £368,600, which is a decrease of almost 3% compared to the previous year.
The rapid rise in mortgage interest rates has been the most devastating for first-time homebuyers, but Barratt reports that this group, which accounts for just under a quarter, is showing “some improvement”.
Barratt built more homes last year than they had expected, despite its worst performance in over a decade. It expects that its profits will be “slightly above our previous expectations” due to the continuing fall in construction costs.
Barratt was expected to turn a profit before tax of £321m, which is less than half the previous year.
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