Housebuilder sees future private reservations drop by 24% on last year
Forward sales of private homes have fallen by a quarter at housebuilder Barratt, the firm said in a trading update today.
It said 2,528 homes have been sold for the coming year, compared to 3,336 at the same point last year, a drop of 24%.However, the company said that revenues were nonetheless 9% up on the same period last year, driven by a move to selling larger homes while volumes remain flat.
Overall, forward sales are virtually identical to last year, because of the drop off in private reservations being filled by a big increase in sales of homes to social landlords. Chief executive Mark Clare said he was still “so far” seeing strong demand from social landlords despite changes to social housing funding in the Comprehensive Spending Review.
The firm said it expected only limited growth in volume in its current financial year, which runs to the end of June 2011. Reservations are running at 0.45 per active site per week, compared to 0.55 during the same period last year.
Chief executive Mark Clare said the autumn selling season had been weaker than anticipated. He said: “The autumn season was clearly more challenging, but despite that we’ve had no increase in down valuations, and we’re concentrating on running the business for value. Access to mortgage finance that our customers need is the single biggest issue.”
However, he said that while customer interest had taken longer to convert into sales at the time of the spending review, there was some signs that the market was recovering since then.
Barratt’s statement said: “Conditions for the UK housing market remain challenging with constrained mortgage lending combined with weaker consumer confidence being key obstacles to significant recovery. The Group is focused on driving profitability through achieving full value for its quality products. As such, we anticipate limited volume growth in the current financial year driven by new site openings.”
Barratt said it had been very successful in the land market, spending £219.9m on land since June, buying 42 sites with the equivalent of 4,467 plots. However it said that consequently the rate of land purchase will now drop, with the firm looking to secure 8,000 plots by the end of the financial year in June 2011.