Britain’s largest homebuilder Barratt Developments (BDEV.L) flagged difficult trading conditions over the coming months after it posted a fall in annual profit on Wednesday, as high mortgage rates and a cost-of-living squeeze pummel demand.
Affordability concerns stoked by high mortgage rates and a prolonged cost-of-living crisis have weighed on the UK housing market, with indicators on everything from mortgage demand to construction rates and prices sliding in recent months.
Barratt said the UK housing market remained difficult and the outlook uncertain, adding that it expected average sales sites to reduce by around 6 per cent in the current fiscal year.
The company said forward sales – a key industry metric which gauges housing demand – stood at 2.44 billion pounds ($3.07 billion) as of Aug. 27, down 36 per cent from a year earlier.
The FTSE 100 (.FTSE) listed builder said its pre-tax profit was 884.3 million pounds for the year ended June 30, compared with a company-compiled analyst consensus of 882 million pounds.
British house prices in August were 5.3 per cent lower than a year earlier, their biggest annual decline since July 2009, mortgage lender Nationwide said on Friday.
The number of house purchases in Britain this year is on course to drop by 21 per cent to its lowest since 2012, property website Zoopla forecast last week.
“Whilst we expect that the backdrop will continue to be difficult over the coming months, we are a resilient business with a strong balance sheet,” CEO David Thomas said in a statement.
“We continue to expect a moderate recovery in FY25 and expect further recovery the following year with our new FY26 estimates,” analysts at Credit Suisse said after cutting their 2024 earnings-per-share estimate on weaker margins and higher expenses.