Sosandar, finance news, cyberattack, Marks and Spencer, retail business, UK economy

Barratt Redrow, the UK’s largest housebuilder, has reported weaker-than-expected sales results for the year ending June 2025, sending shockwaves through the markets. The company revealed it sold 16,565 homes during the period, falling short of its earlier forecast of 16,800 to 17,200. Shares in the FTSE 100-listed developer dropped by 9.4 per cent, closing at 377.25p.

Chief Executive David Thomas attributed the shortfall to reduced completions in London, where international buyers and investors in the private rented sector failed to materialise as anticipated. Consumer caution, coupled with higher-than-expected mortgage rates, further dampened demand. The company’s total average selling price rose to £344,000, an increase from £307,000 last year, but these higher prices were not enough to offset the slowdown in volume.

The order book improved slightly, with forward sales totalling £2.9 billion. However, the capital continues to be a challenging market for Barratt Redrow, with lower completions and weaker profit margins compared to its regional business. The failure to implement reforms aimed at boosting sectoral safety and modernising practices has also delayed the recovery of housing delivery targets.

Looking ahead, Barratt expects to sell between 17,200 and 17,800 homes in 2026, reflecting subdued market conditions and flat sales outlet numbers. Thomas expressed optimism about long-term demand, citing the structural housing under-supply in the UK. The company plans to mitigate the ongoing challenges by offering incentives such as deposit top-ups to support buyers in navigating the challenging conditions.

Analysts, however, have voiced concerns about the broader state of the industry. Anthony Codling of RBC highlighted that recent changes to planning rules are not yet being enforced by local authorities, creating significant risks for housebuilders. Codling suggested that government intervention to enforce these rules may occur in the autumn, which could provide some relief to the sector.

Barratt’s struggles are echoed across the sector. Other housebuilders, including Berkeley Group and Vistry, have issued similar warnings about weaker profits and sales. Last month, Berkeley Group projected a decline in pre-tax profits to £450 million, while Vistry reported a year-on-year fall in completions for the first half of 2025. Despite these challenges, Barratt remains confident in its medium-term goal of delivering 22,000 homes annually, banking on an eventual resurgence in consumer confidence and the effects of planned planning reforms.

The housebuilder expects adjusted pre-tax profit for this year to align with consensus forecasts of £582.6 million. However, achieving this will depend on its ability to navigate the current economic landscape, marked by higher mortgage rates and waning consumer confidence.