Barratt predicts short-term weakening of housing market

Mark Clare, chief executive of house builder Barratt Developments, has spoken out about prospects for the UK housing market, post the Northern Rock crisis.

He sees the crisis and the shortage of credit on the money markets as likely to cause a reduction in demand for new homes, and even a fall in house prices.

Whilst Mr Clare believes that the long-term fundamentals for the UK housing market have remained unchanged, with demand still far exceeding supply, he believes that a weakening of the market in the short-term is inevitable.

Already the difficulties experienced by Northern Rock are resulting in other mortgage lenders become much more cautious and Barratt is seeing mortgage providers offering lower multiples of people’s earnings and lower valuation multiples, whilst also demanding larger deposits.

The house building sector traditionally experiences an upturn in business during September and although this has occurred to some extent, Barratt’s sales over the past 11 weeks are below the high volumes for the same period of 2006.

According to Mr Clare, prime locations and top-of-the-range homes are likely to stay very much in demand but he expects sales to be much slower for secondary locations, such as apartment blocks in the less-desirable areas.

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