Barratt cuts homebuilding targets amid concerns over mortgage rates
- Barratt to build fewer homes in 2025, anticipating a decrease in homebuilding targets by up to 7%.
- The dip in new home volumes is attributed to elevated mortgage rates and broader economic concerns.
- Labour's promise to fix the housing shortage faces challenges as Barratt adjusts its targets downward.
In recent developments, the new government has emphasized its willingness to override local authorities when necessary. This comes amidst financial updates from major players in the housing sector, such as Barratt Developments, which revealed a potential drop in homebuilding targets for the upcoming year. The company expects to build between 13,000-13,500 homes, down from the 14,004 completed in the previous year, reflecting a cautious approach in light of economic uncertainties. Barratt's announcement coincides with a broader trend in the industry, with Berkeley Group also showing a decline in the number of new homes delivered. The Competition and Markets Authority is currently reviewing Barratt's proposed takeover of Redrow, with a decision expected in August. Despite the challenges, housebuilders express support for the government's focus on housebuilding and planning system reform as crucial for economic growth and addressing the housing shortage. The housing market saw Barratt's shares fall after the company revised its annual targets downwards, citing factors like higher mortgage rates and economic concerns. Average selling prices also experienced a decline, with home completions for the year down compared to the previous period. However, the company remains optimistic about future prospects, expecting growth in the coming years and expressing confidence in its resilience and customer service standards. Chancellor Rachel Reeves has pledged to address the chronic shortage of new homes by reinstating mandatory housebuilding targets for local authorities, increasing planning resources, and promoting green energy projects. Barratt's proposed acquisition of Redrow for over £2.5 billion, if approved, is seen as a positive move that could benefit the company in the future. Despite the challenges posed by the current economic climate, Barratt and other industry players remain committed to navigating the uncertainties and contributing to the government's housing goals.