‘Murky’ Barratt sees profits fall amid mortgage challenges
Coalville-based housebuilding giant Barratt Developments has posted somewhat gloomy full year results.
For the year-ending June 30 2023 Barratt saw home completions fall by almost 4% to 17,206 and adjusted profit drop by 16.2% to £884.4m.
A statement from Barratt said: “Whilst there remains a clear need for increased housebuilding in the UK, short-term demand has been impacted by mortgage affordability challenges.
“Based on current market conditions, we are targeting total home completions of between 13,250 and 14,250 in FY24.”
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, added: “Lower home completions combined with elevated build cost inflation have taken their toll on Barratt Developments and its peers. New home buyers are clearly exercising greater caution, and the outlook for the coming months is highly uncertain.
“Mortgage rates have increased significantly over the past year and have been highly volatile from one week to the next, making it very difficult for home buyers to plan their next move. First time buyers have experienced even greater pressure, given the limited availability of high loan to value mortgages and the end of the Help to Buy scheme in England.
“Barratt is doing everything it can to weather the storm, reducing costs and stepping back from the land market. But like all housebuilders, it has limited control of its own destiny and needs market conditions to improve.
“The outlook for Barratt is murky at best right now. Cracks are starting to appear in the housing market, and while interest rates should be close to peaking, first time buyers remain under enormous pressure. Until there is greater clarity on the future path of interest rates it seems unlikely market conditions will significantly improve.”