Barratt Redrow sees ‘more stable’ conditions on the housing market
- Barratt Developments completed its £2.5 billion acquisition of Redrow on August 22
- She believes the partnership will help tackle Britain’s significant housing shortage
Barratt Redrow signaled ‘more stable market conditions’ as the group posted solid growth in the first trading period following a £2.5bn housing merger.
The Leicestershire-based housebuilder, a recent merger of rivals Barratt Developments and Redrow, recorded a weekly net private booking rate per active outlet of 0.67 between August 22 and October 13.
This was 36.7 percent more than the pro-forma equivalent of 0.49 over the same period last year, when higher mortgage rates depressed demand for housing.
Good signs: Barratt Redrow said it was seeing “more stable market conditions.”
Barratt Developments completed its £2.5 billion acquisition of Redrow on August 22, after originally agreeing the purchase in February and receiving approval from the Competition and Markets Authority.
She believes the partnership will help tackle Britain’s significant housing shortage by speeding up the construction of new homes.
The expanded group expects to deliver 16,600 to 17,000 homes in the 2025 financial year, compared to just over 14,000 homes last year, and is targeting 22,000 completions in the medium term.
Inflation and mortgage rates in Britain have fallen significantly this year, raising optimism among housebuilders that trade is recovering.
David Thomas, CEO of Barratt Redrow, said: ‘While customer demand remains sensitive to the wider economy, we are starting to see more stable market conditions with greater availability and affordability of mortgages.
“It will take some time for customer confidence to fully recover from the macroeconomic headwinds of the past two years, but we are encouraged by the solid trading we have seen in recent weeks.”
The Labor government has pledged to build 1.5 million properties in five years, partly by hiring more planning officers and developing on lower-quality ‘grey belt’ land.
Only 183,610 new homes were completed in the UK in the 12 months to March, according to figures from the Office for National Statistics.
Barratt Redrow further announced that it is ‘confident’ the integration will deliver at least £90 million in cost synergies.
It wants to achieve this by optimizing purchasing, closing nine division offices and reducing central and support functions.
Aarin Chiekrie, equities analyst at Hargreaves Lansdown, said: ‘If operations can be streamlined and new homes delivered as expected, there is ample opportunity for an earnings recovery in the medium term.
“But as with any merger, there will be challenges along the way.”
Barratt Redrow shares were 1.6 per cent higher at 481p late on Wednesday morning.
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