Barratt Redrow has reduced its land acquisition targets for the current financial year, citing increased global uncertainty in a decision that may impact the government’s housebuilding ambitions.
The company now expects to approve between 7,000 and 9,000 plots for purchase, down from previous guidance of 10,000 to 12,000. Land spending has been revised to £700m-£800m, compared with earlier expectations of £800m-£900m.
The housebuilder attributed the reduction to recent geopolitical developments and concerns over potential impacts on mortgage rates and construction costs, leading to a more selective approach to site acquisition.
Industry-wide caution
The move follows Berkeley Group’s decision earlier this month to halt new land purchases in response to market volatility. The concurrent pullback by major developers raises questions about the feasibility of the government’s target to deliver 1.5 million homes over five years.
Recent data from the Centre for Policy Studies indicates that 140,860 homes were completed in England during Labour’s first year in office, with fewer than 116,000 started. This falls short of the approximately 300,000 annual completions required to meet the five-year target.
Market pressures persist
The housebuilding sector continues to face multiple challenges including elevated borrowing costs, rising construction expenses and planning constraints. These pressures come despite ministers introducing planning reforms and committing £39bn to a long-term affordable housing programme.
Broader market conditions have also shifted, with rental prices stagnating for the first time since 2017 and affordability pressures mounting across housing sectors.
Short-term outlook maintained
Despite the cautious stance on land acquisition, Barratt Redrow stated it does not expect current global tensions to affect near-term performance. The company said approximately 95% of its sales target for the year is already secured and maintained guidance to deliver 17,200 to 17,800 homes alongside pre-tax profits of £568m.
The reduced land buying activity among major housebuilders may have longer-term implications for housing supply, particularly as the government seeks to accelerate delivery through policy reforms.
