Barratt Developments, the UK’s largest housebuilder, noticed a pointy drop in income after it constructed far fewer properties final yr.
It accomplished simply 14,000 within the yr to June, in comparison with 17,000 for the earlier 12 months, and says the entire might be decrease once more subsequent yr.
Pre-tax revenue fell by three quarters for the yr, which Barratt blamed on excessive rates of interest laying aside housebuyers and inflation pushing up prices.
The completion figures pose an issue for the brand new Labour authorities’s pledge to “get Britain constructing”.
Chief government David Thomas stated the agency was “well-positioned to satisfy the robust underlying demand for brand spanking new properties”.
Nevertheless, the agency forecasts it’ll solely end between 13,000 and 13,500 new properties subsequent yr.
The federal government has made rising the availability of housing a precedence, pledging to construct 1.5 million extra properties in England over the following 5 years.
It has promised to reform the planning course of, release components of the inexperienced belt, and reintroduce necessary housing targets for native authorities.
Mr Thomas stated the agency welcomed the federal government’s proposed reforms of the planning system as a “key lever to extend home constructing, drive financial progress and deal with the continual under-supply of high-quality, sustainable properties”.
The federal government hopes adjustments to planning coverage will enhance housebuilding, however Barratt’s outcomes present the extent to which mortgage charges have an effect on how a lot it decides to construct.
Aarin Chiekrie, an fairness analyst at Hargreaves Lansdown, stated Barratt’s numbers have been “a painful learn for buyers” regardless of being according to market expectations.
“With fewer properties being bought and at decrease costs, much less money has come by way of the entrance door,” he wrote in a be aware.
“With a brand new authorities now in energy, there’s elevated hope that a few of the points hindering housebuilders, like planning rules, might be mounted,” he stated.
“However additional easing of mortgage charges might be essential for exercise to choose up considerably,” he added.
Barratt is within the means of buying fellow housebuilder Redrow, though the deal continues to be awaiting approval from the competitors regulator.
