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.
Barratt is probably not alone in scaling back on house building due to economic circumstances. I expect many developers are also following suit. The Government can’t force developers to build. Faced with failing even more behind on targets the Government has to all but abandon them to save face.
It would seem that Barratt are now cherry picking what developments they want to proceed with. We don’t know what these developments are but they must be ones where there is better profitability for them. Probably higher end developments in more upmarket areas. We are always told that developers need more land. Councils who failed to meet their targets were punished by having to provide more land to try to encourage developers to build. Land is not the answer, over 40+% of land with planning permission never gets built on. With the 16 sites Barratt will proceed with added to the 22 they will not now proceed with it seems like they are complying with the 40% figure.
You can’t blame the developers they are businesses after all and have to do what is best for them. As such the Government largely leave them alone. Landlords are businesses as well it’s just a pity the Government don’t leave us alone the same way instead of “improving things” ultimately to the detriment of tenants..
On the principle of “if you want something doing, do it yourself”. The Government and Local authorities should set up not for profit building companies to build the affordable homes we badly need. There will be pool of labour available if the developers are laying workers off. The trouble is that the WFH jobsworths who work for my Local authority wouldn’t have a clue how to begin.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register