Housebuilder Barratt reported a halving in profit and drop in completions amid a challenging housing market, but has said it is optimistic about the future.
Barratt said its total home completions in the year ended 30 June reached 14,004, down 18.6 per cent from 17,206 in 2023 but at the upper end of the company’s expectations.
The fall has come despite respite from soaring building costs and Labour’s pledge to cut planning red tape.
The company reported adjusted gross profit of £689.0m, down 56.4 per cent from £1.13.4bn in 2023, due to “lower home completions and average selling prices, reduced margin due to site based fixed cost levels and build cost inflation,” it said.
Adjusted profit before tax was £385m, down from £884.3m in 2023, which was at the upper end of Barratt’s guidance.
Britain’s biggest housebuilder had been expected to report a fall in home completions and profits ahead of previous expectations.
The housing market has been subdued amid affordability constraints, although Barratt said that underlying demand in the UK remained “strong”.
David Thomas, chief executive of Barratt Developments said: “We are pleased to have delivered total home completions at the upper end of our expectations for the year, despite the challenging backdrop.
“We were delighted to complete the acquisition of Redrow in August and are now working constructively with the CMA to finalise competition clearance so that we can begin the integration process.”
After three months of investigation by the CMA, the watchdog has said it considers that there are reasonable grounds for believing that the deal will be approved after a series of compromises were put forward by Barratt and Redrow.
The CMA has until 18 October to decide whether to accept the changes or refer the deal to a phase two investigation.
Thomas added: “Whilst demand continues to be sensitive to mortgage affordability, and reduced land buying activity during the past two years has had a near-term impact on the number of outlets we are operating from, we are well-positioned to meet the strong underlying demand for new homes of all tenures in the UK.
“We welcome the Government’s proposed reforms of the planning system as one of the key levers to increase housebuilding, drive economic growth and tackle the chronic undersupply of high-quality, sustainable homes.”
Chancellor Rachel Reeves has said the Government will restore mandatory housebuilding targets for local authorities as part of the drive to build 1.5 million homes over five years, which is expected to help builders.
Other major UK housebuilders Vistry and Berkeley group are also set to report results this week.