Barrat sales hit by market uncertainty

British housebuilder Barratt Developments today reported a weaker-than-expected autumn selling season after customers took longer to commit to house purchases.

In line with other firms, Barratt said reservations per active site fell to 0.45 a week in the period since the start of July, compared with 0.55 in 2009 as confidence dwindled in the run-up to the government’s spending review.

The cancellation rate also increased for the period to 15.2% from 13.9% but Barratt said it was encouraged by a 9% rise in its average selling price to £180,000 as it benefits from a change in the mix of its properties.

Chief executive Mark Clare said conditions in the housing market remained challenging, with constrained levels of mortgage lending and weaker consumer confidence seen as the key obstacles to a significant recovery.

He added: “Whilst the autumn selling season has been weaker than anticipated, our encouraging performance on price is expected to drive margin growth for the year.”

Numis Securities described the first quarter trading update as slightly disappointing from a volume perspective, prompting it to downgrade estimates for next year. It is now looking for profits of £35m, compared with previous forecasts for a figure of around £38m.

Barratt, which is the UK’s largest housebuilder by volume, said forward sales were in line with last year at £870.9m.

It has agreed terms on £220m of land purchases equating to a total of 42 sites and 4,467 plots. In the period of the trading update, Barratt said it operated from an average of 349 active sites.

The company expects the rate of land acquisition to slow due to its recent success in purchasing land and given greater competition in the market.