- No sign of activity picking up
- Private reservations fall further
- Completions seen down around 20%
The UK’s leading housebuilder Barratt Developments (BDEV) echoed the downbeat sentiment expressed earlier this week by rival Bellway (BWY), describing the new-build market as ‘uncertain’ and lamenting the end of the government’s Help To Buy initiative for first-time buyers.
Barratt shares slid 2.8% to 412p, dragging with them shares in fellow FTSE 100 developers Bellway and Persimmon (PSN).
SLUGGISH PRIVATE RESERVATIONS
In a trading update ahead of its AGM (annual general meeting), the Leicestershire-based housebuilder described trading from the start of its new financial year on 1 July to date as ‘in line with expectations’, which it characterised as ‘difficult, with homebuyers still facing mortgage challenges’.
Net private reservations per outlet per week have dropped from an already-low 0.55 in the comparable period last year to 0.46 this year, although both figures include sales to the private rental sector and social housing providers so the ‘real’ comparison is 0.42 against 0.51 last year.
‘Reservation activity has continued to reflect the mortgage challenges faced by potential homebuyers, as well as the absence of Help to Buy reservation activity which accounted for 12% of private reservations in the prior year period’, commented chief executive David Thomas.
COMPLETIONS AND SALES SEEN FALLING
Given the weak reservation rate, total forward sales including joint ventures are 9,221 unit against 13,314 in the same period a year ago, a drop of more than 30%, with a value of £2.36 billion or almost 35% less than a year ago.
The firm called the outlook ‘uncertain’ and said it would focus on ‘driving revenue through targeted use of incentives, whilst continuing to manage build activity and control our cost base’.
For the full year, it sees total completions ranging from 13,250 to 14,250, in line with its prediction in September, representing a 17% drop from last year in a best-case scenario and 23% in a worst-case scenario.
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