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UK housebuilder Barratt Redrow delivered 16,565 homes in the past year, falling short of its target due to delays in London handovers, especially for international and rental investors. The housing market remains fragile as high living costs and slow mortgage rate drops deter buyers. Following the news, the company's stock dropped over 9%. Despite this, forward sales rose to £2.9 billion, and the average selling price increased to £344,000. The company is offering buyer incentives and has identified £69 million in merger-related cost savings. It aims to build up to 17,800 homes this year, though planning delays and high borrowing costs remain key concerns.
UK housebuilder Barratt Redrow has missed its annual home completion target, delivering 16,565 units lower than the company's anticipated range of 16,800 to 17,200 homes. The shortfall was largely attributed to delays in project handovers across London, especially those meant for international buyers and private rented sector investors. The overall market has remained fragile due to continued cost-of-living pressures and slower-than-expected mortgage rate declines, prompting prospective buyers to hesitate. Advertisement
Following the announcement, shares of the company dropped by over 9%, with a broader fall of approximately 13% from recent highs. This marked the steepest intraday decline in Barratt's stock since late 2022. The FTSE 350 household goods and home construction index also slipped by nearly 5%, reflecting wider concerns in the housing sector.
Despite the setback in completions, Barratt Redrow reported forward sales of around GBP 2.9 billion, a notable increase compared to GBP 2.2 billion a year earlier. The company's average selling price rose to approximately GBP 344,000, supported in part by pricing discipline and location selection. Management confirmed that they are actively deploying a range of customer incentives to bolster buyer engagement, including deposit top-ups, shared-equity offers, and rent-to-buy arrangements.
In the wake of last year's merger, the firm has already identified cost synergies worth GBP 69 million and expects additional efficiencies as integration progresses. Looking ahead, the company anticipates delivering between 17,200 and 17,800 homes in the current financial year and reaffirmed its medium-term goal of building 22,000 homes annually.
Barratt Redrow also maintained its financial guidance for the year, with expected profit before tax projected in line with earlier estimates. The group reiterated its commitment to returning capital to shareholders through its ongoing GBP 100 million share buyback programme.
However, the company acknowledged several headwinds. The UK planning system continues to pose challenges due to bureaucratic delays, despite broader national-level reforms aimed at streamlining approvals. Additionally, elevated borrowing costs and continued uncertainty around inflation are dampening buyer appetite, particularly among first-time homeowners.
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