Barratt warns of ‘marked slowdown’ in housing market as it pauses recruitment

Barratt Developments, the Coalville-based housebuilding giant, has warned investors of a “marked slowdown” in the housing market in its latest trading update.

The firm says its half year ended December 31 2022 was “strong”, but this was only due to a “significant” forward order book last June.

The slowdown in the housing market has seen the value of Barratt’s forward order book drop from £3.8bn in December 2021 to £2.54bn in December 2022, while reservation rates have also fallen by over 100 homes a week.

A statement from Barratt said: “The slowing reservation rate in the first quarter of FY23 reflected the political and economic uncertainties at that time, particularly around impending cost of living challenges, coupled with a limited availability of homes for early occupation given our strong forward order book. The second quarter saw a material impact from the significant escalation in mortgage interest rates on both affordability and homebuyer confidence.”

To counter this, Barratt says it is pausing any new recruitment and “significantly” reducing land approvals. The firm says reservation activity in the first quarter of the new calendar year will determine whether any further action will be required.

David Thomas, chief executive, said: “We have delivered a strong operating performance for the six months to 31 December 2022. This was possible because of our significant forward order book at 30 June 2022 and the tremendous efforts of our employees, sub-contractors and supply chain partners.

“The first half of the financial year has however seen a marked slowdown in the UK housing market. Political and economic uncertainty impacted the first quarter; this was then compounded by rapid and significant changes in mortgage rates which reduced affordability, homebuyer confidence and reservation activity through the second quarter.

“Our business remains fundamentally strong, both operationally and financially, with an experienced leadership team, a strong net cash position and a resilient and flexible business model. We are focused on successfully navigating the challenges ahead and continuing to deliver excellent quality and service for our customers.”