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Barratt Redrow has announced a significant dip in half-year profits, as ongoing economic uncertainty and subdued buyer confidence weigh heavily on the housing market. The UK’s largest housebuilder reported a 13.6% decrease in underlying pre-tax profits, totalling £199.9 million for the six months ending December 28, 2025. This downturn comes despite a slight increase in home completions, signalling the challenges faced by the industry.
Economic Factors at Play
The company attributed its profit drop to a combination of factors, including a lack of consumer confidence and heightened affordability issues, particularly for first-time buyers. The late autumn Budget, scheduled for November 26, contributed to an extended period of uncertainty among potential homebuyers, causing many to delay decisions until after the announcement. Barratt Redrow revealed that while trading conditions were stable, the overall climate remained challenging.
“Consumer confidence remained low, economic and political uncertainty was high, and affordability challenges remained an issue for many customers,” the company stated. However, the period following the Budget saw an uptick in completions as buyers rushed to finalise purchases before Christmas.
Home Completions and Sales Outlook
Despite the profit decline, Barratt Redrow managed to complete 7,444 homes, marking a 4.7% increase from the previous year. The average selling price for private homes rose by 5.21% to £392,900. Looking ahead, the group maintains its forecast for total home completions to fall between 17,200 and 17,800 units for the full year. However, the company emphasised that its annual performance hinges on sales activity during the spring selling season.
As of February 1, the company’s forward sales stood at 11,168 homes valued at £3.41 billion, up from 10,903 homes a year ago, albeit slightly lower than the previous year’s value of £3.35 billion. The firm has also started offering increased incentives to encourage buyer interest amid a sluggish market.
Leadership’s Perspective
David Thomas, Chief Executive of Barratt Redrow, highlighted the company’s resilient performance in a challenging environment, stating, “During the first half, we delivered a resilient performance in a subdued market while making strong progress integrating Redrow.” He noted the need for a stable demand environment to enhance delivery across the sector, despite progress on planning reforms.
In response to the profit drop, Barratt’s shares fell by 6%, and the company announced a nearly 10% cut to its interim dividend, bringing it down to 5p. Market analysts have remarked on the “budget hangover” reflected in the results, but there are signs of potential recovery on the horizon.
Industry Insights
Analysts have pointed to some positives that could signal a turning point for Barratt. Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, noted that with the Budget behind them, the outlook appears marginally more optimistic. The market is predicting two interest rate cuts by the end of 2026, which could enhance buyers’ purchasing power.
Moreover, the merger with Redrow is expected to yield cost efficiencies as operations are streamlined, allowing Barratt Redrow to negotiate better pricing with suppliers. In contrast, rival MJ Gleeson is also feeling the pinch, reporting a 53% drop in pre-tax profits amid soaring build costs.
Why it Matters
The current state of Barratt Redrow reflects broader trends within the UK housing market, characterised by economic uncertainty and shifting buyer behaviours. As the nation grapples with affordability issues and fluctuating market conditions, the performance of major housebuilders like Barratt will be crucial in shaping the sector’s recovery trajectory. Investors and stakeholders alike will be watching closely as the spring selling season approaches, hoping for signs of renewed stability and growth in the housing market.
