Barratt Redrow maintains guidance despite softer private demand

Barratt Redrow said private homebuyer demand remained soft in the opening months of its financial year, though rental sales helped offset the weakness.

The admission that buyer demand was falling away wouldn’t have come as a surprise to the market amid higher mortgage rates and faltering consumer confidence.

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The housebuilder said its underlying private reservation rate fell to 0.53 in the 17 weeks to 25 October, from 0.57 a year earlier, reflecting continued affordability pressure.

However, stronger demand from the private rental sector and other bulk sales lifted its total reservation rate to 0.59, above last year’s level.

Completions fell 12% to 3,223, reflecting a lower opening order book, though its forward order book grew.

Barratt Redrow maintains guidance

Perhaps the most important takeaway from the update was that the company kept its full-year guidance unchanged and said it welcomed the government’s new “Your First Home” scheme to support first-time buyers, though it was too early to assess its impact.

Barratts expects to deliver 17,100 wholly owned completions this year.

Dean Banks, who became chief executive this year, said the performance had been resilient against a challenging backdrop, and that there was “much to build on”.

“Our trading performance in the first 17 weeks of the financial year has been resilient against a backdrop of challenging market conditions, with continued pressure on affordability,” Dean Banks said.

“While the underlying private reservation rate has been softer, we have seen stronger demand from the private rental sector.

“We welcome the Government’s ‘Your First Home’ scheme and its support for first-time buyers. Alongside planning reform, the scheme has the potential, over time, to support increased housing delivery.”

Barratt Redrow shares

Barratt Redrow shares were little changed on Wednesday, with the stock opening marginally higher. Barratt shares have ground higher since the start of the Iran war and investors will hope the government’s support for the sector can help the stock kick on from here.