UK housebuilder Barratt Developments said on Wednesday that it is 'doing everything it can to weather the storm' but added that it expects market conditions will continue to be difficult over the coming months.
The firm, one of the UK’s largest housebuilders, reported an adjusted profit before tax of £884 mln in its full year results, down 16.2% on the same period a year before
'Mortgage rates have increased significantly over the past year and have been highly volatile from one week to the next, making it very difficult for home buyers to plan their next move. First time buyers have experienced even greater pressure, given the limited availability of high loan to value mortgages and the end of the Help to Buy scheme in England,' a company representative said.
To weather the storm, Barratt said that it is reducing costs and stepping back from the land market. 'But like all housebuilders, it has limited control of its own destiny and needs market conditions to improve,' it added, although this seems 'unlikely until there is greater clarity on the future path of interest rates'.
The announcement follows a profit warning from housebuilder Crest Nicholson in August.
The company said it was now expecting to make £50 mln in annual pre-tax profits this year, down from previous forecasts for £73.4 mln, saying that conditions had 'worsened' due to 'persistently high inflation and rising interest rates'.
Crest Nicholson said mortgage costs were deterring buyers, particularly first time buyers, who have no equity to support their purchases and were no longer able to draw on government schemes like Help to Buy.
