Barratt warns of more writedowns to come

Housebuilder Barratt has forecast further writedowns as the UK property slump deepens.

In an interim management statement for the period from 1 July to 9 November, the firm said that market conditions have been “extremely challenging”, putting prices and margins under pressure.

A review of land assets and sites will take place at the half-year stage, with results announced to the stock market in February, said Barratt.

Private net reservations averaged 197 per week for the period – less than one sale per week per site – a 23% drop from last year, it said. Visitor levels were down 5.8% on 2007.

Cancellations averaged 24% for the period, up slightly from 23% last year.

But the housebuilder said that sales were in line with expectations for the period and had started to pick up since the beginning of the autumn selling period in September.

However, it estimated that average selling prices will have fallen 15-20% by the end of December from their peak in July 2007, pushed down by buyers' expectations and a lack of mortgage liquidity.

Chief executive Mark Clare said: “Conditions in the housing market are now as tough as anyone can remember, with increasing pressure on prices and margins. Against this backdrop, Barratt's focused sales effort has enabled us to deliver robust sales volumes, in line with management expectations.”

Barratt's order book stands at £817.7m, or 5,513 plots, down from 10,424 plots in 2007. Total land spend for the year will be less than the £568m disclosed in September, it said, as it was investing in land only where it is contractually committed to do so.