Barratt brings in hiring freeze as UK housing market slows down

Housebuilder also cuts land purchases, with it forced to scrap proposals for 3,293 plots

Britain’s largest housebuilder, Barratt Developments, has introduced a hiring freeze and is “significantly” cutting back on buying land as it steels itself for a further slump in the UK housing market.

Barratt said it was responding to a “marked slowdown” in the UK housing market after a rise in interest rates that had made mortgages more expensive for prospective homebuyers.

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

It was also forced to scrap building plans for 3,293 land plots, cancelling out the 3,003 plots that proceeded with construction. The net cancellation of 290 plots compares with the net addition of 8,869 a year earlier.

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

“Political and economic uncertainty impacted the first quarter; this was then compounded by rapid and significant changes in mortgage rates, which reduced affordability, homebuyer confidence and reservation activity through the second quarter.”

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

Lenders have increased mortgage borrowing costs in response to rising UK interest rates, which have increased nine times in the past year. Lenders raised mortgage rates even 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 off the shelf, while others raised the costs of borrowing in response to the uncertainty.

The turmoil has increased costs for those needing to remortgage their homes, and depressed appetite among homebuyers, with the latter pushing down house prices across the UK.

Halifax, which is part of Lloyds Banking Group, the UK’s biggest high street bank, reported last week that the average UK house price had fallen for the fourth month in a row in December.

Last month, the lender predicted that rising interest rates as well as the broader cost of living crisis would dampen house prices by about 8% over the course of 2023.

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

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


Kalyeena Makortoff

The GuardianTramp

Related Content

Article image
Barratt expects profit of more than £800m amid housing market boom
Housebuilder also benefits from rush to complete purchases before end of stamp duty holiday

Joanna Partridge

14, Jul, 2021 @2:04 PM

Article image
Exodus of first-time buyers puts brakes on UK housing market
Hike in mortgage costs after mini-budget cuts 20% off buyer demand in October

Jess Clark

14, Nov, 2022 @12:01 AM

Article image
UK house prices: Halifax and Barratt warn of challenges ahead
Average price of home rises to £294,260 in August as cost of living crisis and interest rates hit home

Joanna Partridge

07, Sep, 2022 @1:30 PM

Article image
UK house sales outlook for 2023 remains ‘uncertain’, says Barratt
Housebuilder reports ‘modest uplift’ in reservations of new homes in January but remains cautious

Joanna Partridge

08, Feb, 2023 @1:49 PM

Article image
How rising interest rates sent the UK housing market into reverse
An end to ultra-low rates mean borrowers can only afford smaller mortgages

Larry Elliott

01, Mar, 2023 @12:49 PM

Article image
Shares in big UK estate agent chain fall as housing market cools
Housebuilders also see share price falls as interest rate rises and cost of living crisis deter potential buyers

Joanna Partridge

25, Nov, 2022 @3:56 PM

Article image
Barratt cuts price of £1m-plus London homes
Housebuilder says overall market conditions are healthy and Brexit vote has not hit demand for new homes

Angela Monaghan and Hilary Osborne

16, Nov, 2016 @4:03 PM

Article image
‘I have to move my bike to get to the fridge’ – the UK boom in microflats
From rentals the size of a tiny hotel room to Barratt’s pocket-sized new-builds, the market is expanding

Julia Kollewe

15, Nov, 2021 @6:00 AM

Article image
Barratt posts record £910m profit despite tough housing market
Biggest UK housebuilder benefits from help to buy but warns of slow growth this year

Julia Kollewe

04, Sep, 2019 @2:34 PM

Article image
UK house prices fall for fifth month in a row
Average cost of home now 3.2% below August 2022 peak as mortgage demand slumps

Joanna Partridge

01, Feb, 2023 @8:21 AM