In a trading statement covering the half-year ending December 31 2022, Barratt reported its sales rate for the full period as 0.44 net private reservations per active outlet per week compared to 0.79 last year. The firm’s forward order book as of December 31 was 10,511 homes at a value of £2,544.4 million compared with 14,818 homes at £3,794.3 million the year before.
However, total home completions in the six months stood at 8,626, 7% higher than the year before. Barratt’s private average selling price increased by about 13.6% to around £372,000 (HY22: £327,400), reflecting, it says, a positive mix impact, an increased proportion of London completions and underlying house price inflation.
David Thomas, Barratt CEO, comments: "We have delivered a strong operating performance for the six months to 31 December 2022. This was possible because of our significant forward order book at 30 June 2022 and the tremendous efforts of our employees, subcontractors and supply chain partners.
“The first half of the financial year has however 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.”
Barratt suggests that if net reservation rates increase in line with normal Spring trading patterns to 0.50 per active outlet per week then the firm remains on track to deliver 17,475 home completions in the full year as expected. However, if trading remains at recent levels, completions will slip to between 16,000 and 16,500 for the year.
The housebuilder says it has taken a number of actions to respond to current market conditions, “including significantly reducing land approvals, pausing recruitment of new employees and introducing further controls for new site openings to manage our working capital deployment. Reservation activity in the first quarter of the new calendar year will determine whether any further action will be required.”
Thomas concludes: “Our business remains fundamentally strong, both operationally and financially, with an experienced leadership team, a strong net cash position and a resilient and flexible business model. We are focused on successfully navigating the challenges ahead and continuing to deliver excellent quality and service for our customers."
