Barratt Development reports that it has seen new-build home reservations drop by a third in recent weeks, as the company warns of a ‘less certain outlook’ for the housing market.

The housebuilder said it now expects to see a fall in annual profits following a plunge in reservations in recent weeks as a deepening cost-of-living crisis and soaring mortgage rates hit the housing market hard.

The FTSE 100 housebuilder said the net number of reservations for private property sales made in an average week from July to October dropped to 188 from 281 in the corresponding period a year ago, reflecting “wider economic uncertainly”, as the cost-of-living crisis is made worse by higher mortgage rates and reduced mortgage availability.

Barratt forecast adjusted profit before tax for this financial year that was in line with market expectations of around £972.5m, down from the record £1.05bn it reported for the year ended June.

“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,” Barratt said in a statement.

Shares in the major housebuilders, including Persimmon, Taylor Wimpey and Berkeley, fell by between about 3% and 5% yesterday, while Barratt saw its share value fall by almost 7%.

“The market has been expecting bad news from the housebuilding sector and now we’ve got it,” said AJ Bell analyst Russ Mould. “There are growing fears that property prices are going to fall as mortgage rates shoot up and fewer people can afford to buy a house or flat.”