BRITAIN'S largest homebuilder Barratt Developments reported on Wednesday (Oct 12) a plunge in reservations in recent weeks as a deepening cost-of-living crisis and soaring mortgage rates hit the housing market hard.
The company's shares fell 7 per cent in early trade, dragging down those of its peers, as it warned of a "less certain" outlook.
It said net private reservations per average week fell to 188 from Jul 1 to Oct 9, from 281 in the same period in 2021.
Britain's housing market has showed signs of slowing in recent months as interest rates have risen, while soaring inflation and recession fears have hit consumer confidence.
More recently, mortgage rates have risen sharply after the UK government's plan for billions of pounds of unfunded tax cuts spooked financial markets.
"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," Barratt said in a statement.
Shares in other top builders including Persimmon, Taylor Wimpey and Berkeley fell by between 1.6 per cent and 3.2 per cent.
"A deterioration in the affordability of mortgages, especially for first time buyers, is just about the biggest spanner that could be thrown at the builders," said Hargreaves Lansdown analyst Sophie Lund-Yates in a note.
Barratt said it was still on track to deliver adjusted profit before tax for this financial year in line with its current expectation and also forecast wholly-owned completions to be in line with the year earlier.
The FTSE-100 company, which last month announced a £200 million share buyback after posting a record annual profit, said total forward sales stood at 13,314 homes worth £3.60 billion, as of Oct 9, compared with 15,393 units valued at £3.94 billion a year earlier. REUTERS