Shares in Barratt fell on Wednesday as the UK’s biggest housebuilder said new home sales were falling as higher costs and fewer mortgages amid the cost-of-living crisis were deterring customers.
Barratt said net weekly private reservations fell to an average 188 from 281 in the July 1 – October 9 period. It added that adjusted full-year pre-tax profits are expected to come in at £972.5m – in line with estimates, but lower than previous guidance.
“The outlook for the year is less certain with the availability and pricing of mortgages critical to the long-term health of the UK housing market,” Barratt said in a trading update.
Interest rates have been rising as central banks fight surging inflation. Britain has also been hit by the government’s ill-received recent mini-budget which introduced a swathe of unfunded tax cuts, sending markets into freefall and forcing mortgage providers to pull many loan deals.
Mortgage rates have also surged, with some two-year fixed-rate loan now touching 7%.
“Based on our completions to date, our strong forward order book and current market conditions, we now expect wholly owned completions to be in line with those reported in FY22,” the company added.
Reporting by Frank Prenesti for Sharecast.com
