Barratt Developments is the second largest homebuilder in the UK and they are also experiencing sales hits. They believe that the recent five interest rate increases by banks in the last 15 months and the credit crunch on mortgages are the cause of the recent reduction in sales. They also believe that the consumer confidence has been shaken due to mortgage lenders like Northern Rock. If the causes can be combated Barratt believes that housing sales may not decrease any further. Many are hoping that the New Year will bring an increase and it is believed that the interest rate cycle has peaked.
The consumer confidence is another matter. The mortgage finance availability and pricing is also going to be important. If these three things are not addressed it could affect the success of next years sales. Barratt expects the operating margin for the first half of the year to be relatively in line. However they are hoping that investors will be encouraged as they have seen a 4% increase in recent days. Barratt is just one of the companies experiencing issues and until the consumers feel more confident in the actual market the hoped for changes may not induce the housing sales to rise.