IT is clear that confidence is returning to the housebuilding sector as today’s announcement by Barratt Developments, confirming it is forging ahead with a £2.5 billion merger with Redrow despite concerns from the competitions watchdog, reveals.

Both Barratt and rival Redrow are keen to complete the deal and the update that Barratt has temporarily waived local competition concerns from the Competition and Markets Authority (CMA) is a sign that the new, enlarged entity – to be known as Barratt Redrow – shows determination by both parties to get the job done.

UK homes builder Barratt to buy Redrow for £2.5 billion

The watchdog, in its Phase 1 investigation of the merger, expressed fears that the move could lead to higher prices and lower quality homes in and around the Shropshire market town of Whitchurch.

However, in today’s update, Barratt, noted that the CMA had not flagged any concerns about the merger on a national level and pointed out Whitchurch represents just one of more than 400 areas where the two companies overlap.

Both companies are said to be exploring solutions “with the objective of agreeing suitable undertakings which would address the CMA’s limited concerns and avoid the need for a reference to a full Phase 2 investigation”.

Persimmon buoyed by market optimism and consumer confidence

The Barratt-Redrow merger contrasts with Bellway’s decision last week to walk away from a £720 million takeover bid for its smaller rival Crest Nicholson after months of negotiations. In July, Crest said it was “minded” to accept Bellway’s improved all-share bid after rejecting two earlier approaches in April and May as too low, the latter valuing the business at £650m.

Bellway did not give any reasons for calling a halt to its plans to acquire Crest, instead stating: “Bellway remains confident that its robust balance sheet and operational strength, combined with the depth and quality of its land bank, will enable Bellway to deliver volume growth in the years ahead and support ongoing value creation for shareholders.”

Previously, the boards of Bellway and Crest has said that “good progress has been made on reciprocal due diligence with a number of elements satisfactorily completed by both parties”.

Barratt, meanwhile, headquartered in Leicestershire in the East Midlands, will be buoyed by encouraging figures from property website Rightmove, which show a significant increase in enquiries on homes for sale since the Bank of England cut rates at the beginning of this month.

Cut to interest rate brings welcome relief to UK housing market

Another of the country’s major housebuilders, Persimmon, is also in rude health having delivered a solid set of half-year results for the half year ending June 30, 2024 – another clear sign that confidence is returning to the housing market. The York-based company made a point of attributing its performance to an uplift in consumer confidence which has led to a strong pick-up in enquiries over the summer.

Barratt, Persimmon, Bellway, and others will be hoping this positive shift for the sector continues.