Housebuilder takes prudent line as it predicts that interest rates rises will cause housing market to tighten

Barratt has warned that the housing market is set to tighten in a trading update following recent interest rate rises.

Barratt chief executive Mark Clare
Barratt chief executive Mark Clare

In its first trading update since its acquisition of Wilson Bowden, Barratt said: “Going forward it would be prudent to assume that the cumulative effect of interest rate rises will cause the housing market to tighten.”

The comments follow a weak trading statement issued by Bovis Homes on Monday, adding to fears surrounding the housing market.

However, Barratt said its group forward sales were up 15% from June 2006, to £1.4bn, and it was confident it could “compete effectively.” The company said Barratt Homes forward sales at 1 July were up 20% at £1.1bn, with David Wilson Homes forward sales were up 4% at £404m.