Barratt Developments PLC (LSE:BDEV) has said it remains on track to deliver pre-tax profits in line with the current consensus but cautioned that the “wider economic uncertainty” has seen the level of private reservations fall.
In a trading update covering the period from July 1 to October 9, 2022, David Thomas, Barratt's chief executive commented: "We continue to see strong levels of interest across the country, however, private reservations remain below the level seen in full year 2022 as customers react to the wider economic uncertainty.”
The housebuilder said that net private reservations per average week were 188 compared to 281 for the year as a whole and net private reservations per active outlet per average week were 0.55 compared to 0.85 for the whole year and 0.87 in 2021.
The group said the fall in private reservations reflected increased wider economic uncertainty, where growing cost of living concerns have been compounded by increased mortgage interest rates and reduced mortgage availability.
In addition, Barratt said it had limited availability of homes for early occupation given the strength of its forward order book, while there has also been the expected reduction in Help to Buy activity.
Reflecting the slower reservation rate, total forward sales as of October 9, 2022, totalled 13,314 homes compared to 15,393 last year at a value of £3,603.1mln (2021: £3,936.6mln).
The housebuilder said it is now 64% forward sold with respect to private wholly-owned home completions for the full year 2023 down from 72% in full-year 2022, while average selling prices were £377,200, up from £344,300 in 2021.
Build cost inflation is expected to be between 9% and 10% for full-year 2023, the company said.
Looking ahead the group said the outlook for the year is less certain with the availability and pricing of mortgages critical to the long-term health of the UK housing market.
But it said it expects completions to be in line with those reported in full-year 2022.
Barratt said it is in a strong financial position with a substantial net cash balance and strong forward sales position and confirmed its commitment to the £200mln share buyback programme announced on September 7, 2022.