Barratt optimistic about UK home sales uplift in January

UK HOMEBUILDER Barratt Developments says that there are reasons for optimism in Britain’s housing market, following an uplift in January sales.

The average number of weekly private sales – the so-called net private-reservation rate – at Barratt’s sites rose to 0.49 in January, up from 0.44 in the six months until December, the company said on Wednesday (Feb 8). That comes as the company’s forward sales increased to 10,854 homes as at Jan 29, compared with 10,511 at the end of last year.

“We have seen some early signs of improvement in current trading during January,” chief executive officer David Thomas said. Still, “we will need to see continued momentum over the coming months before we can be confident that these challenging trading conditions are easing”, he added.

Barratt rose as much as 2.3 per cent in early London trading.

The sharp increase in the cost of mortgage borrowing has triggered a slump in demand for new homes. Barratt, Taylor Wimpey and Persimmon – a trio which collectively built more than 45,000 homes last year – all warned last month that demand for new houses had tumbled, and hinted at more disruption for the market in 2023.

Barratt said that it expected land approvals in 2023 to be “minimal”, because of current market conditions and the strength of its land bank. The homebuilder said that 22 previously approved sites will no longer proceed, resulting in a net cancellation of six sites in the six months until December. 

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“Barratt Developments’ strong land bank bolsters its resilience,” BI analyst Iwona Hovenko wrote. Still, the “challenging economic backdrop, high rates and inflation may prove a heavy test”, she added. BLOOMBERG