Major developer reveals slowdown in demand for new-build homes

Demand for new-builds has slowed amid the current economic environment, a major developer has revealed.

A trading update from Barratt Developments for the period 1 July 2022 to 9 October 2022 showed its private reservation rate was down.

Net private reservations per average week were 188, down from 271 in the equivalent trading period.

This was attributed to “customer response to increased wider economic uncertainty, where growing cost of living concerns have been compounded by increased mortgage interest rates and reduced mortgage availability.”

Barratt Developments said it has “limited availability of homes for early occupation” given the strength of its forward order book.

It has launched 25 developments during the period and delivered 3,608 completions, down from 3,699 last year.

Completions are expected to remain in line with the typical seasonal pattern, with around 45% in the first half and around 55% in the second half of the financial year.

Reflecting the slower reservation rate, Barratt Developments said its total forward sales figure was 13,314 homes, down from 15,393 this time last year. 
 

Looking ahead, the company has maintained its performance expectations but said “the outlook for the year is less certain with the availability and pricing of mortgages critical to the long-term health of the UK housing market.”

David Thomas, chief executive of Barratt Developments, said: "We continue to see strong levels of interest across the country, however private reservations remain below the level seen in the full year 2022 as customers react to the wider economic uncertainty.

“Whilst the outlook for the year is less certain, we remain on track to deliver adjusted profit before tax for the year in line with current consensus, and we are focused on maintaining our commitment to lead the industry in the quality, energy-efficiency and sustainability of our homes and in our customer service, all of which are fundamental to our ongoing success amid a more challenging market backdrop."