Barratt warns house market slowing down despite posting record profits of over £1bn
Barratt Developments warned that the housing market is slowing after posting record profits of over £1billion for the first time.
The FTSE 100 housebuilder said the number of its homes being reserved by buyers has fallen below levels seen before the pandemic, which it attributed to lower availability as well as ‘heightened macro-economic uncertainty’.
Barratt boss David Thomas said while current trading was ‘more challenging’ during July and August, this was ‘not that surprising’ as consumer confidence took a hit from the cost of living squeeze.
Falling demand: Barratt Developments said the number of its homes being reserved by buyers has fallen below levels seen before the pandemic
Investors also seemed wary of a difficult period ahead for the property market as Barratt’s shares dropped 1.9 per cent, or 8.1p, to 414.1p.
The firm, however, reported a record profit of £1.05billion for the year to the end of June, up from £919million in the prior 12 months, as revenues climbed 9.5 per cent to £5.3billion.
The figures were boosted by the completion of 17,908 new homes, a 3.9 per cent increase year-on-year and a return to pre-pandemic levels, as Barratt noted continued high demand for housing.
But the results were marred by an extra £396million in costs relating to fixing safety issues with some of the firm’s buildings such as cladding.
Thomas said the group’s ‘financial strength’ left it in a good position.
Richard Hunter, head of markets at Interactive Investor, said while Barratt’s foundations may be ‘strong’, the sector as a whole was suffering.
Data from Halifax showed house prices growing strongly despite a modest slowdown.
The mortgage lender said average prices hit a record high of £294,260 last month – up an impressive 11.5 per cent year-on-year though this was slightly weaker than the 11.8 per cent rise in the year to July.