Barratt Developments has released a trading update confirming it has “taken pricing action” on a number of its higher-end London sites.
The housebuilder said that while overall conditions “remain healthy”, the upper end of the market in the capital is “challenging” and risks have had to be mitigated.
About 20 of the firm’s 385 schemes are in London, with around a third of those classed as higher end. Chief Exec David Thomas talked about a 5-10% price adjustment in an interview with Reuters.
To further “de-risk” London delivery, the firm said it had also exchanged on a build and sale agreement on a bespoke development of 39 apartments for a total value of £47m.
Total UK forward sales over the period (July to November) were up by 4.3% to £2,654.3m (2015: £2,544.6m), with net private reservations per average week showing no change on last year at 265.
The firm added that sales rates remain “softer” in London compared with last year, while Northern and Central regions are “strongly outperforming”.
Here’s another interesting nugget: “During the period the purchase of £200.2m (2015: £255.8m) of operational land was approved, equating to 15 sites (2015: 36 sites) and 2,864 plots (2015: 5,336 plots). Whilst this is less than we would normally expect in this period, it was impacted by our caution immediately following the EU referendum.”
David Thomas, Chief Executive: “This has been another good trading period for the Group. Consumer demand is strong supported by good mortgage availability. We are mindful of the potential for economic uncertainty created by the outcome of the EU Referendum. However, market fundamentals are robust, and we remain a housebuilder of choice. Barratt’s commitment to quality design, build and excellence in market-leading customer service has supported our strong sales performance. Our focus remains on maintaining good operational and financial performance, and delivering attractive shareholder returns.”
Image: Barratt Developments