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Housebuilder Barratt says it has seen a “marked slowdown” in the UK housing market over the past six months on the back of olitical and economic uncertainty” and rising mortgage rates, which made homes less affordable.
Mortgage costs surged after the government’s mini-budget in September, peaking at 6.65% for a two-year deal, and while the market has recovered slightly since, Barratt said it was approving fewer new development projects and putting hiring new staff on hold, amid an “uncertain” outlook for the second half.”
David Thomas, head of Barratt, said: “Political and economic uncertainty impacted the first quarter; this was then compounded by rapid and significant changes in mortgage rates which reduced affordability, homebuyer confidence and reservation activity through the second quarter.”
The firm said buyer confidence and the “availability and competitive pricing of mortgages” were “critical to the health of the UK housing market in the coming months”.
Barratt said that throughout the last six months, its housing developers had been “very selective with respect to the land opportunities on which we have been prepared to bid, reflecting the increased uncertainty on the outlook for both the UK economy and the housing market”.
“In the period we have approved 16 new sites but these were more than offset by 22 previously approved sites which will no longer proceed,” it added.
Former analyst, Anthony Codling, CEO, Twindig, said: “Barratt is battening down the hatches as storm clouds loom over the UK housing market. Sales rates are falling and land buying is reducing. However, we believe that Barratt will emerge fitter and leaner on the other side and has a strong Balance Sheet to see it through the housing market challenges ahead.”
Barratt said if the housing market continued on its current downward trend, Barratt and its joint ventures expected to build a total of 16,000-16,500 homes in the year to 30 June – down from a projected 17,475.
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