Barratt Developments, one of the UK's largest homebuilders, expects its homebuilding targets for fiscal 2025 to decrease by up to 7% due to high mortgage rates and economic concerns. The company forecasts constructing 13,000-13,500 homes by June 2025, down from 14,004 homes built last year. Forward sales have also dropped to 7,239 homes from 8,995 a year ago. Despite these challenges, Barratt anticipates profit slightly above expectations for the 2024 fiscal year. In February, Barratt agreed to acquire Redrow in an all-stock deal worth GBP 2.52 billion. The housing sector remains hopeful for policy changes under the new Labour government.
Britain's Barratt Developments anticipates a decrease of up to 7% in its homebuilding goals for fiscal 2025 due to high mortgage rates and broader economic uncertainties impeding the housing market's recovery.
In early trading, the company's shares fell 1.8% to 482.50 pence. The housing industry is hoping for a significant change in homebuilding policy with the new Labour government, but the delay in interest rate cuts has dampened expectations for a quick recovery.
Barratt, one of the UK's largest homebuilders by output and revenue, expects to construct 13,000-13,500 homes by June 2025, including 600 units from joint ventures. The group reported building 14,004 homes in the year ending June 30, reaching the upper end of its forecast.
Last week, Britain's new finance minister Rachel Reeves vowed to address the chronic shortage of new homes. She announced that the government would reinstate mandatory house building targets for local authorities and fund the hiring of more planners to accelerate the development of large green energy projects.
Barratt stated that it anticipates a decrease in the number of average outlets, or active sales sites, this year but is confident that the numbers will increase by the 2026 fiscal year. Forward sales, an important industry metric indicating near-term housing demand, were 7,239 homes, including joint ventures, as of June 30, down from 8,995 units a year ago
The FTSE 100 builder predicted that its profit for the 2024 fiscal year would be slightly above expectations. Analysts, on average, expect an adjusted profit before tax of GBP 357 million ($456.82 million) for the year ending June 30, a significant drop of about 60% from the GBP 884.3 million reported the previous year.
Barratt's FTSE 100 peers, Taylor Wimpey and Persimmon, have cautioned about subdued market conditions this year, while Vistry on Tuesday projected a 7% increase in half-year profit due to strong demand for its affordable homes. In February, Barratt agreed to acquire its smaller competitor Redrow in an all-stock transaction valued at approximately GBP 2.52 billion
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