Barratt profits drop amid budget uncertainty and subdued buyer demand

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Barratt Redrow delivered a mixed set of first-half results, but there’s hope that momentum can pick up from here.

“Sales rates only dipped slightly over the period, despite rising uncertainty ahead of the UK Budget back in November.

“The order book and average selling price have both been trending higher.

“But that was in part down to Barratt’s increased use of incentives to convince buyers to sign on the dotted line for a new home.

“While it’s kept momentum moving forward during a period of heightened uncertainty, it’s also weighed on margins, and underlying operating profits of £210million fell three per cent short of market expectations.

“With the Budget hurdle now out of the way, the picture moving forward is a touch more favourable.

“The market’s currently forecasting two rate cuts by the end of 2026, which should help buoy buyers’ purchasing power slightly.

“The Redrow merger is also bringing a host of cost benefits as overlapping operations are streamlined, and the group’s enlarged scale is allowing it to negotiate harder on prices with suppliers.

“Guidance has also been reiterated, with Barratt expecting to ramp up production over the second half and build between 17,200 and 17,800 new homes this year.

“But ramping up construction to its medium-term target of 22,000 new homes annually could take a while to reach, and relies on demand picking up materially, which is largely out of the group’s control.”