Barratt Developments, one of the UK’s largest housebuilders, has released an AGM trading update for the period from 1 July to 8 October:
· Trading environment remains difficult
· Forward sales significantly down on last year at 9,221 homes (2022: 13,314 homes)
· Barratt continues to target total home completions of 13,250 to 14,250 in FY24
Charlie Huggins, Manager of the ‘Quality Shares Portfolio’ at Wealth Club, commented:
“New home buyers are still exercising considerable caution, given the higher cost and reduced availability of mortgages. However, expectations for the year ahead already reflect this challenging backdrop meaning Barratt has maintained its full year targets.
Barratt is doing all it can to weather the current storm in the housing market. The group has taken a knife to costs, has stepped back from land purchases and is offering greater incentives to buyers. The reality however is that there is so much out of its control. Its destiny depends to a considerable extent on housing market conditions.
A housing market recovery seems unlikely while interest rates remain around current levels. This is because many new home buyers are effectively locked out of the market, either because they cannot afford a mortgage, or because banks won’t lend to them. On the plus side inflation appears to be moderating. If this trend continues it will increase pressure on the Bank of England to reduce rates, breathing life into the housing market.
Right now though, the housing market is in a tough place and it is hard to see that changing over the balance of 2023.”
