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Affordable completions down 28.6% at Barratt as impact of ‘muted demand’ continues to be felt
Barratt Developments has announced a drop in affordable completions of 28.6% in its latest trading update, as overall completions fall due to effects of “muted demand”.
Total home completions reduced by 18.6% to 14,004, compared to 17,206 in the previous period, the house builder said in its update for the year to 30 June 2024.
This total included 536 homes from joint ventures, versus 828 in the previous period.
A “lower order book and more muted demand in the first quarter of the year resulted in a 28.5% decline in total home completions in the first half”, Barratt said. Completions dropped by a “more modest 8.7% in the second half”.
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“Whilst we continue to navigate a challenging macroeconomic backdrop, we are delivering industry-leading build quality, sustainability and customer service,” said David Thomas, chief executive of Barratt.
“Combined with the strength of our balance sheet, this has ensured we remain resilient and responsive through the cycle.”
Barratt said it expected total home completions for the full year of 2024-25 to be in the range of 13,000 to 13,500, including around 600 completions from joint ventures.
The house builder also gave an update on its legacy property charges, which total around £192m, up from £179.2m in the previous period. These include a charge of £61.9m in the first half of the year related to an increase in fire safety and external wall system provisions, and remediation costs.
A charge in the second half of the year of £130m related to developments previously identified as potentially requiring remediation work, Barratt said.
Barratt added that through the private rented sector and “the strength of our long-standing relationships with registered providers”, it secured 1,452 private reservations, compared to 1,769 in the previous period.
Total forward sales at 30 June 2024 stood at 7,239 homes, down 19.5% compared to the previous period, which it said was in line with expectations.
Barratt also reported costs in relation to its proposed multibillion-pound merger with Redrow – approved by shareholders in May – of around £23m.
The combined group will have capacity to build “in excess” of 22,000 homes a year and is expected to bring in annual revenues of around £7.5bn, they said in a filing published earlier this year.
The CMA announced in March it was looking into the merger and in June launched a phase one merger inquiry.
Mr Thomas said: “Looking ahead, we are pleased that the proposed combination with Redrow was strongly supported by both sets of shareholders in the spring and, subject to the Competition and Market Authority’s (CMA) approval, we look forward to bringing together two businesses to create an exceptional UK house builder ensuring we are well-positioned for the future.”
The deadline for the CMA to announce its decision on whether to progress to a phase two investigation is 8 August 2024.
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