BARRATT Developments said UK reservations were lower than a year earlier amid the impact of “significant macroeconomic uncertainty”, but it believes market fundamentals remain strong on supply and demand.
The housebuilder posted record annual figures with underlying pre-tax profits hitting the all-time high of £1.05 billion for the year to June 30, up 14.7 per cent on the previous year, with revenues up 9.5% at £5.3bn.
Barratt said that weekly net private reservations per site fell to 0.6 since its year end, which was down from 0.82 in the year to June and below the 0.7 level seen before the pandemic.
It added that it expects house price growth to ease back over the coming months “whilst build cost inflation continues at between 9% and 10%”, which could hold back growth in profit margins.
Barratt Developments said: “Looking ahead, we recognise that significant macroeconomic uncertainties remain, most notably around inflation, energy costs and interest rates, and their impacts on UK economic growth, employment, and consumer confidence and spending.
“International incidents, notably the ongoing conflict in Ukraine, could also disrupt global supply chains and further affect confidence at home.”
READ MORE: Barratt misses completions target, shares down
Douglas McLeod, managing director for Barratt Developments in Scotland, said new sites the firm is to open will create 2,316 new homes across Scotland during the course of 2022.
He said: “The 14 new developments span the length and breadth of Scotland and include Craigtoun, St Andrews, Mains Loan in Dundee and Newton Farm and Jackton Hall in South Lanarkshire.
“Our plans underline the group’s confidence in the fundamentals of investing and building in Scotland, including continued demand for sustainable new homes and changing demographics even in an uncertain economy.”
He said: “Estimates from Homes for Scotland have suggested that 465,000 new homes will be required by 2035 in order to meet housing need.
“In addition to the core brand, we’re going to continue to focus on developing the David Wilson Homes business in Scotland, with further expansion planned into the north region at Countesswells, Findrassie, Elgin and at St Andrews.
“Every day on our sites across Scotland our experienced, skilled team are hard at work answering a demand for high quality, energy efficient, sustainable housing. Overall, we’re looking forward to a busy new financial year.”
The group launched a £200 million share buyback programme after its full-year performance, with the first tranche of £50m to be completed by the end of 2022.
On a reported basis, its pre-tax profits fell 20.9% to £642.3m, largely due to a £408.2m hit from a mounting bill to address fire safety concerns on tall buildings in the wake of the Grenfell Tower tragedy, including costs of an industry pledge on building safety.
Barratt said that despite wider economic pressures, it still expects to grow house completions to between 18,400 and 18,800 in 2022-23, up from 17,908 in the year to June.
The company added that its forward sales remain “strong”, with 55% of the group’s completions in 2022-23 already sold, although this is down from 59% a year ago.
Its forward order book stands at 14,058 homes or £3.81bn, against £3.84bn a year earlier.
Barratt shares closed down 8.1p, or nearly 2%, at 414.1p.
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