Barratt cuts new homes forecast as demand remains ‘tentative’

Barratt said it is expecting to complete around 1,000 homes fewer this year than it previously forecast, after sales rates did not bounce back as quickly as it hoped.

Britain’s biggest housebuilder, in its half-year results, said it now expects to complete between 16,500 and 17,000 homes in its full year.

This is down on the 17,475 it said it was “on track” to deliver a few weeks ago. This figure had assumed net private reservation rates of 0.50 homes per site per week in “line with normal Spring trading patterns”

However, the seasonal improvement in sales rates in January has been less than Barratt hoped for, at 0.49 homes per week. This, while an improvement on December, is down from the 0.9 reported for the same period the previous year and reflects “the more tentative demand seen in the calendar year to date” said Barratt.

Barratt also cautioned that its new aim of building between 16,500 and 17,000 homes “remains dependent on how the market evolves through the Spring selling season”.

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David Thomas, chief executive of Barratt, said: “The economic backdrop has clearly been challenging and consumer confidence weakened significantly during the half, which meant we saw lower reservation rates for future sales - particularly in the second quarter.

“While we have seen some early signs of improvement in current trading during January, we will need to see continued momentum over the coming months before we can be confident that these challenging trading conditions are easing.

The housebuilder, in its half year results to 31 December, however reported completing 8,626 completions homes in the six months, up 6.9% on the same period last year.

Turnover and profit also increased by 23.9% to £2.8bn and by 15.9% to £501.5m respectively. Turnover was bolstered by a 13.6% rise in average selling price to £372,000.