Barratt warns housing market is slowing despite posting record profits of over $1bn
Barratt Developments warned the housing market is slowing after posting record profits of over £1billion for the first time.
The FTSE 100 homebuilder said the number of its homes reserved by buyers had fallen below pre-pandemic levels, which it attributed to lower availability as well as “heightened macroeconomic uncertainty”.
Barratt CEO David Thomas said that while current trading was “more challenging” in July and August, it was “not that surprising” as consumer confidence has been hurt by pressure on the cost of living.
Falling demand: Barratt Developments said the number of its homes being reserved by buyers has fallen below pre-pandemic levels
Investors also appeared fearful of a difficult period for the property market, as shares of Barratt fell 1.9 per cent, or 8.1p, to 414.1p.
However, the company reported a record profit of £1.05 billion for the year to the end of June, up from £919 million in the previous 12 months when revenue rose 9.5 per cent to £5.3 billion.
The numbers were boosted by the completion of 17,908 new homes, a 3.9 percent increase from a year earlier and a return to pre-pandemic levels, as Barratt noted persistently high demand for housing.
However, the results were offset by an additional £396m in costs related to fixing security issues at some of the company’s buildings, such as B. fairings clouded.
Thomas said the group’s “financial strength” put them in a good position.
Richard Hunter, Interactive Investor’s head of markets, said while Barratt’s fundamentals are “strong,” the sector as a whole is suffering.
Data from Halifax showed house prices rose sharply despite a slight 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, although that was slightly weaker than the 11.8 per cent rise in the year to July.