Barratt outlook strong despite slowdown

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by Kay Murchie

Barratt Developments said rising interest rates and the credit crunch have had a negative impact on the UK property market and the firm has warned that a slowdown is likely.

Barratt said in a trading statement for the 19 weeks from July 1, it secured a forward order book of £1.8 billion, which represents 61%. It added that consumer confidence, mortgage finance availability and pricing will be key to determining the success of the 2008 spring selling season.

The housebuilder believes that interest rates have now peaked.
Barratt said it would focus on margin improvement by cutting costs, cutting back lower margin segments of the buy-to-let market which brought lower profit margins.

Mark Clare, chief executive, said the firm was expecting profits to be in line with the guidance given in early 2007 and added looking forward, the fundamentals of the market remain strong with demand exceeding supply and with a government committed to increasing the supple of new housing.

Barratt purchased rival Wilson Bowden earlier this year for £2.2 billion and as a result became the UK’s third largest housebuilder.