Barratt Developments sees 10% drop in reservation rates in Q1

(Sharecast News) - UK housebuilder Barratt Developments has said it remains on track to hit targeted home completions despite a much slower start to the financial year as a result of ongoing challenges prospective buyers are finding in securing mortgages. Chief executive David Thomas said the trading environment since 1 July "remains difficult", as the company reported falls in both private reservations and forward sales.

The declines reflected the impact of higher borrowing costs and the absence of the Help to Buy scheme, which accounted for 12% of private preservations in the first quarter of last year.

Net private reservations per week average 169 in the first quarter, down from 188 the year before, with net private reservations per active outlet per average week falling to 0.46 from 0.55.

With the reservation rate falling, total forward sales as of 8 October totalled just 9,221 homes, down from 13,314 at the same point last year, at a value of £2.36bn, down from £3.60bn.

Barratt said it is now 60% forward sold with respect to private wholly owned home completions, down 10 percentage points on last year.

"The trading environment remains difficult, with potential homebuyers still facing mortgage challenges. Against this backdrop, we are focused on driving revenue whilst continuing to manage build activity and carefully control our cost base," Thomas said.

Nevertheless, Barratt still reckons it will deliver total home completions of between 13,250 and 14,250 during the fiscal year ending 30 June 2024, and said all other guidance remains unchanged.

"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 and a highly experienced management team. We remain committed to building the communities that our customers want to live in - delivering high-quality, sustainable homes at competitive prices to help address the country's housing crisis and drive long term, sustainable growth for our business."