10 July 2024
If you are covering the trading update from Barrett Developments, please see comment below from Oli Creasey, property analyst at Quilter Cheviot:
“Barratt Developments has released a trading statement for the full year to June 2024, ahead of more comprehensive results to be published in September.
“It is clear that 2024 is a challenging year as sales volumes fell almost 20%, and the average house price that a private sale was agreed at fell by 6%. However, much of this was known or expected, but what will be most disappointing to shareholders is that the prospects for 2025 (year-end Jun 2025) are no better – in fact arguably worse.
“The company has guided to sales volumes for the next year to be around 13,000 to 13,500 homes, which is 6% down against prior year, and around 10% below the consensus estimates from sell-side brokers. Admittedly, this looks to be mostly a timing issue. The company’s landbuying profile means that there are fewer sites ready to build out compared to last year. However, even with the explanation, it remains a negative surprise.
“Management have welcomed the new government’s urgency and focus on housebuilding and are looking forward to working with them and other stakeholders to deliver new homes. However, they also acknowledge the continued challenging macro backdrop and demand sensitivity to mortgage pricing.
“The merger between Redrow and Barratt is continuing, and the CMA review is likely to be finished in early August.”
