Barratt explained in a trading update that new home completions were forecast to fall to between 13,250 and 14,250 in the next 12 months, up to 23% down on the 17,206 delivered in the year to the end of June 2023.
The housebuilder revealed that reservations slowed sharply at the end of 2022 and, despite improving in the Spring, slowed beyond "normal seasonal trends" from mid-May to the end of June.
In the year to the end of June, net private reservations per active outlet per week were 0.55, including a contribution of 0.10 from increased reservations into the private rental sector and to registered providers of social housing.
The firm has a strategic partnership with Citra Living which provides homes for the rental market. In June Barratt announced the sale of 604 homes to Citra, which helped boost the reservation rate since late April to 0.67. The firm operated from an average of 367 outlets in the year up from 332 in the year before – this was partly because the slower reservation rate extended the sales activity at some outlets.
Barratt expects average active sales outlets to reduce by around 6% in FY24 – partly because the firm has stepped back from the land market.
First-time buyer reservations in the year reduced by 49% compared to last year following the end of Help to Buy and increases in mortgage interest rates, but demand among existing homeowners was more resilient, according to the firm.
Increased use of sales incentives, reservations into the private rental sector, and fewer London units saw house prices within Barratt's order book fall by approximately 3.5% over the year to June with the private ASP in the order book down 8.7% to £342,900.
Barratt CEO David Thomas said: “During a year of economic and political uncertainty, we have delivered a strong operational and financial performance while maintaining our industry-leading quality, customer service and sustainability credentials.
“Whilst the trading backdrop has become more challenging in recent months, with many of our customers facing a significant cost of living pressures, we have responded decisively - increasing our reservations into the private rental sector, using incentives for customers in a disciplined way, and flexing our build activity, land buying and operating costs to reflect market conditions.
“As a result, we enter the new financial year in a robust financial position with a solid forward order book and we are ready to respond to any further changes in the housing market.”
