House building giant forced to slow down its work schedule
May 15 2008 by Graeme King, The Journal
THE head of housebuilder Barratt says the company will have to be highly selective about starting new work as the economy slows – but the business’s North East heartland is one of its best- performing divisions.
Mark Clare, chief executive of Barratt, said the near-£1bn company would be slowing down its housebuilding nationwide, but was happy with progress at the division based in Newcastle.
The company currently has 21 live sites across the North East, with three more in the pipeline, at Hetton-le-Hole, Spennymoor and Norton on Teesside.
Mr Clare expects these sites to go ahead as planned but did admit that Barratt would probably require fewer contract workers.
And a Newcastle stockbroker said he was still concerned that the housebuilding sector was under pressure, so is advising against investing.
In a statement looking at trading for the first 19 weeks of 2008, Barratt said its number of active housebuilding sites was set to fall as it responds to a significant deterioration in market conditions.
Barratt said its forward order book currently stood at around £1.56bn, compared with £2.1bn a year earlier.
The company said it was having to use sales incentives to stimulate demand and was suffering from lenders withdrawing many mortgage deals from the market.
The update from Barratt echoed comments from rivals in recent weeks, including Persimmon, Taylor Wimpey and Redrow.
Mr Clare said: “The Barratt heartland, the historic strength of the company in Newcastle, continues to perform well.”
Responding to the Government yesterday extending the scope of shared-equity schemes to help first-time buyers get on the property ladder, Mr Clare welcomed the move.
He said: “The Government say they are putting more money into shared equity and we welcome that.”
Gary Fawcett, of Brewin Dolphin stockbrokers in Newcastle, said: “This statement from Barratt was pretty much as expected.
“There could be a recovery, but it’s extremely challenging for housebuilders at the moment and it’s difficult to see how it’s going to turn round. Housebuilding is a sector under pressure, and my view is to avoid it.”
Graeme King
