Barratt Redrow misses homebuilding target as affordability hits demand
Housebuilder Barratt Redrow has built fewer homes than its target after affordability pressures continued to hit demand for new houses.
The company, which was formed by a merger of Barratt and Redrow last year, said that total home completions for the 52 weeks ended June 29 reached 16,565.
It had aimed for between 16,800 and 17,200 homes, but said “fragile” homebuyer confidence and slower-than-expected rate cuts ate into demand.
However, Baratt Redrow said that “there remains a long-term under-supply of new homes, adding that it had seen “some increases in mortgage market competition and availability”.
It expects total home completions to be between 17,200 to 17,800 next year, and has a stated target of 22,000 homes a year in the “medium-term”.
Adjusted profit before tax at Barratt Redrow is expected to be in line with market expectations, and the company has ended the year with net cash ahead of expectations at £772m.
Barratt Redrow calls on Government to boost demand
Barratt Redrow said that while the government’s attempts to boost homebuilding were encouraging, the sector still suffers from low demand.
Since the government has placed the weight of delivering new homes on the private sector, any weakness in demand is a significant stumbling block for its housing ambitions.
“Housebuilders… run a tight ship when it comes to maintaining the supply and pricing level of new homes,” Dr David Crosthwaite, chief economist at BCIS, has said. “They are looking to maximise profit”.
Barratt Redrow encouraged the government to improve affordability for UK house buyers, which is at its lowest in decades.
“To see housebuilding volumes accelerate and reach the numbers needed to tackle our housing crisis… [the] government needs to also address demand-side constraints on private home buyers,” the company said.
Last week, the UK government said it would launch a permanent mortgage guarantee scheme to help first-time buyers get on the housing ladder, helping buyers with deposits as low as five per cent, according to the FT.