The UK’s largest housebuilder, Barratt Developments, is dropping its output amid “difficult” market conditions.
Barratt reported an increase in profit for the year ending 30 June, from £642m to £705m, after its costs associated with legacy properties fell from over £413m to £179m. Turnover also increased, by 1 per cent to £5.32bn.
However, the business has warned it will build up to 20 per cent fewer homes this financial year as the “UK housing market remains difficult”. It added it “expect[s] that the [market] backdrop will continue to be difficult over coming months” but “the outlook remains uncertain”.
Barratt completed 17,206 homes in its past financial year, 702 (or 3.9 per cent) fewer than in its previous year. It said that next year it will only deliver between 13,250 and 14,250 new homes, a further reduction of 17 to 23 per cent.
The housebuilder said: “Looking ahead, we recognise that there are significant macroeconomic headwinds, most notably the continuing inflationary pressures and the resulting interest-rate environment that is impacting mortgage affordability and availability in the UK, as well as economic growth, employment and consumer confidence and spending.”
Barratt chief executive David Thomas said that “new developments are increasingly constrained by an ineffective planning system”, adding: “[Our] results reflect the hard work and dedication of our teams and the decisive actions we have taken as a business to respond to market conditions.”
Barratt said it was now looking to drive revenue through “targeted use of incentives” and sales of homes to the private-rental and social-housing sectors, while “continuing to manage built activity and controlling the cost base”. It added that it will have a “highly selective” approach to land buying.