Barratt Freezes Employment As UK Housing Market Slows | Barat developments

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Barratt Developments, Britain’s largest homebuilder, has introduced a hiring freeze and is “dramatically” reducing land purchases as it positions itself for a further slump in the UK housing market.

Barratt said he was responding to a “noticeable slowdown” in the UK housing market after rising interest rates made mortgages more expensive for potential homebuyers.

The company said the average weekly net number of private property bookings fell in the second half of last year, from 259 to 155.

It was also forced to cancel plans to build 3,293 plots of land, and cancel 3,003 plots that were under construction. Net cancellation of 290 plots compares to net addition of 8,869 in the previous year.

“The first half of the financial year… saw a significant slowdown in the UK housing market,” said Barratt’s chief executive David Thomas.

“The political and economic uncertainty affected the first quarter; This was then compounded by rapid and significant changes in mortgage rates, which reduced affordability, homebuyer confidence and booking activity during the second quarter.”

The outlook for the first half of 2023 is “uncertain,” Barratt cautioned, adding that the health of the UK housing market will depend on homebuyer confidence and the availability of competitively priced mortgages.

Lenders have increased mortgage borrowing costs in response to higher UK interest rates, which have increased ninefold in the past year. Lenders raised mortgage rates further in the wake of the government’s disastrous mini-budget in September, as the resulting market turmoil led some lenders to pull their mortgages from the shelf, while others raised borrowing costs in response to the uncertainty.

The disruption has increased costs for those who need to remortgage their homes, and has reduced appetite among homebuyers, with the latter driving down house prices across the UK.

Halifax, which is part of Lloyds Banking Group, the UK’s largest bank, reported last week that the average house price in the UK fell for the fourth consecutive month in December.

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Last month, the lender projected that rising interest rates plus the broader cost-of-living crisis would dampen home prices by about 8% over the course of 2023.

Higher interest rates have already had an impact on the construction sector, which contracted in December as homeowners took on fewer projects.

However, Barratt said the group remains in a strong financial position. “This provides us with a strong platform and gives us the flexibility to continue to respond to market conditions as they evolve over the next year,” the company said.

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