Barratt warns of 'marked slowdown' in housing market

Housebuilder Barratt says it has seen a "marked slowdown" in the UK housing market over the past six months.

Boss David Thomas said the market had been hit by "political and economic uncertainty" and rising mortgage rates, which made homes less affordable.

Barratt said it was approving fewer new development projects and pausing hiring.

The company said the outlook for the second half of the financial year was "uncertain".

"The first half of the financial year has... seen a marked slowdown in the UK housing market," said Mr 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."

The firm said buyer confidence and the "availability and competitive pricing of mortgages" were "critical to the health of the UK housing market in the coming months".

Mortgages had already been getting more expensive last year due to interest rate rises brought in by the Bank of England, but rates peaked in the aftermath of the mini-budget announced by former prime minister Liz Truss and her then chancellor Kwasi Kwarteng.

Since then, average five- and two-year fixed-rate deals have dropped below 6%, although rates are still much higher than they have been in recent years.

It means a homeowner coming to the end of their fixed-rate mortgage deal and looking for a new one, or first-time buyers taking on their first mortgage, have seen such loans become much more expensive.

Recent figures from the Bank of England suggested mortgage approvals fell to their lowest level in two years as interest rate rises put off buyers.

The Bank has been putting up interest rates, which makes borrowing money more expensive, in a bid to reduce inflation.

Last week Halifax said the average house price in the UK fell for the fourth month in a row in December, as the rising cost of living and higher interest rates put off buyers.

The bank said the average house price was now £281,272 and added buyers and sellers would "remain cautious" over the coming year.

Barratt said that throughout the last six months, its housing developers had been "very selective with respect to the land opportunities on which we have been prepared to bid, reflecting the increased uncertainty on the outlook for both the UK economy and the housing market".

"In the period we have approved 16 new sites but these were more than offset by 22 previously approved sites which will no longer proceed," it said.

The company said if the housing market continued on its current downward trend, Barratt and its joint ventures expected to build a total of 16,000-16,500 homes in the year to 30 June - down from a projected 17,475.