Barratt warns property market is slowing despite record profits of more than £1bn
Barratt Developments has warned that the housing market is slowing after the company posted record profits of more than £1bn for the first time.
The FTSE 100 builder said the number of its homes reserved by buyers had fallen below pre-pandemic levels, which it attributed to lower affordability as well as “increased macroeconomic uncertainty”.
Barratt boss David Thomas said that while current trading was “more challenging” in July and August, it was “not too surprising” as consumer confidence was hit by the sharp fall in the cost of living.
Falling demand: Barratt Developments said the number of its homes booked by buyers has fallen below pre-pandemic levels
Investors were also wary of a challenging period ahead for the property market, with Barratt shares down 1.9 per cent, or 8.1p, to 414.1p.
The firm, however, reported record profits of £1.05bn in the year to the end of June, compared with £919m in the previous 12 months, with revenues up 9.5 per cent to £5.3bn.
The figures were boosted by the completion of 17,908 new homes, a 3.9 per cent increase on last year and a return to pre-pandemic levels, as Barratt said housing demand continued.
But the results were overshadowed by additional costs of £396m related to fixing safety problems in some of the firm’s buildings, such as cladding.
Thomas said the group’s “financial strength” left it in a good position.
Richard Hunter, head of markets at Interactive Investor, said that while Barratt’s fundamentals may be “strong”, the sector as a whole is suffering.
Data from Halifax showed house prices rising strongly despite a modest slowdown.
The mortgage lender said average prices hit a record high of £294,260 last month, up an impressive 11.5 per cent year-on-year, although this was slightly less than the 11.8 per cent rise in the year to July.