Barratt Developments PLC (LSE:BDEV) warned the outlook is uncertain with homebuyer confidence and the availability and competitive pricing of mortgages critical to the health of the UK housing market in the coming months.
“Our full-year out-turn will depend on how the market evolves in the early months of 2023,” the housebuilder said.
In a trading statement, Barratt forecast that if net reservation rates increase in line with normal Spring trading patterns to around 0.50 homes per active outlet per week, it will remain on track to deliver consensus total home completions of 17,475.
But, should the usual seasonal improvement not occur and trading remain at recent levels, the group would deliver total home completions for fiscal year 2023 in the range of 16,000 to 16,500, it cautioned.
In the six months to 31 December 2022, the company said its operating performance was strong but that it had seen a marked slowdown in the UK housing market.
“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,” it pointed out.
Total home completions including joint ventures were at 8,626 against 8,067 in the previous year with a sales rate of 0.44, down from 0.79.
The total forward order book (including JVs) as at 31 December 2022 was 10,511 homes, down from 14,818 at the end of 2021, while net land approvals have been negative with a net 290 plots cancelled against approvals of 8,869 in the same period a year ago.
Barratt said this reflected the cancellation of 22 previously agreed sites resulting in a net cancellation of six sites in the half.
Total average selling price increased by c.14.6% to around £330,000 from £288,000.
Peel Hunt noted: “Unsurprisingly, Barratt Developments' half-year update pointed to sharply lower activity, albeit the strong forward order book coming into the year has offset this recent softness.”
“On balance we see consensus edging back a bit, but calling how the consumer will behave in the next few months remains tricky. Web traffic and site visitors over the last 3-4 weeks have held up well,” the broker added.
Barratt also said Caroline Silver would succeed John Allan as non-executive director and chair designate with effect from 1 June 2023.