Barratt has today released a trading update disclosing that private reservations have fallen below last year’s levels as the combination of economic uncertainty, interest rates rising and the cost of living crisis begin to impact customers.
Between July 1 and October 9 2022, Barratt said net private reservations per average week were 188 (FY22: 281) and net private reservations per active outlet per average week were at 0.55 (FY22: 0.85).
The firm said that the fall in private reservations reflects the customer response to the cumulative effects of growing cost of living concerns, increased mortgage interest rates and reduced mortgage availability.
Barratt said: “In addition, we have limited availability of homes for early occupation given the strength of our forward order book, and we have also seen the expected reduction in Help to Buy activity, which accounted for 12% of private reservations in the period (FY22: 21%; FY21: 51%; FY20: 45%).”
Barratt CEO, David Thomas, said: “We continue to see strong levels of interest across the country, however, private reservations remain below the level seen in FY22 as customers react to the wider economic uncertainty.”
Whilst the outlook for the year is less certain, we remain on track to deliver adjusted profit before tax for the year in line with current consensus, and we are focused on maintaining our commitment to lead the industry in the quality, energy efficiency and sustainability of our homes and in our customer service, all of which are fundamental to our ongoing success amid a more challenging market backdrop.”
During this period, Barratt completed 3,608 (FY22: 3,699) homes (including JVs), remaining in line with its budget plans. The company expects its completion profile in FY23 to remain broadly in line with the typical seasonal pattern of around 45% in the first half of FY23 and the remaining 55% in the second half of the financial year.
Barratt said: “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.”
Barratt launched 25 new developments (including JVs) during the period, a slight decrease from 27 in FY22new developments and operated with an average of 351 active outlets, a 4% growth on FY22.
The update also indicated that Barratt’s forward sales (including JVs) as of October 9 2022 stood at 13,314 homes (October 10 2021: 15,393 homes) with a value of £3,603.1million (October 2021 10: £3,936.6 million).
Barratt approved the purchase of 813 plots across three sites, a significant drop compared to 3,725 plots across 15 sites in FY22.
Barratt commented: “Reflecting the strength of our existing land bank, the increased uncertainty in the sales market and the highly competitive nature of the land market at present where supply remains limited, we now expect land approvals will be substantially below replacement level in FY23.”
Source: Show House News
