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Shares in housebuilder Barratt fell this morning after it reported no improvement in the weak demand picture reported earlier in the summer as it published full year results in line with expectations.

The UK鈥檚 biggest housebuilder said sales per site per week since the start of July had dropped to just 0.42, compared with 0.60 in the same period last year 鈥� a level comparable to the weeks following former chancellor Kwasi Kwarteng鈥檚 disastrous mini-Budget last autumn.

The value of the firm dipped as much as 2.4% in early trading as it said the impact of 鈥渕ortgage affordability challenges鈥� on buyer demand meant that the firm鈥檚 forward sales were 36% down by value, to 拢2.44bn from 拢3.81bn.

Barratt, however, said it saw no change from the overall outlook laid out in a trading update in July, when it said it expected build volumes in the current financial year, to June 2024, to fall by as much as 23% given the weaker demand.

The comments came as the firm reported a 9.8% rise in statutory pre-tax profit for the year to June 30 to 拢705m, on revenue of 拢5.32bn, up 1%, despite the drop off in sales.

The rise in profit was the result of the previous year鈥檚 figure being impacted by a large provision to pay for fire safety costs. On an underlying or 鈥榓djusted鈥� basis, Barratt saw its 2023 pre tax profit fall by 16.2% to 拢884m, from 拢1.05bn in 2022 as demand weakened given a 鈥渟ignificant deterioration in trading following the fiscal event in September 2022鈥�.

The housebuilder also saw its return on capital employed 鈥� the rate at which investment turns a profit 鈥� reduce from 30% to 22.2% 鈥渞eflecting the decline in profitability in the year鈥�.

As reported in July, Barratt built 17,206 homes in the year, down 3.9% on the 17,908 built in 2022, and is now forecasting to build between 13,250 and 14,250 in the year ahead.

Barratt chief executive David Thomas said in the results statement that the market was currently impacted by 鈥渟ignificant macro-economic headwinds鈥�, most notably 鈥減ersistent inflation and a higher interest rate environment鈥�. He said: 鈥淭his backdrop has had a negative impact on UK economic growth, employment, mortgage affordability and consumer confidence and spending.鈥�

However, Thomas said Barratt had nevertheless delivered a 鈥渟trong鈥� performance in challenging conditions, and that while conditions were expected to continue to be difficult, the business was 鈥渞esilient鈥�, with a strong balance sheet and experienced management team to weather the difficulties. Given the lower volume ambition for the year ahead, he said the firm was already 49% forward sold for the year.

The firm said it will continue its strategy in the year ahead of attempting to diversify its customer base, given weaker demand, through sales to institutions and the private rented sector, exemplified by its deal with Lloyds subsidiary Citra Living.

Barratt did not follow others in the sector such as Bellway and Redrow that have announced restructuring and redundancy processes. However Thomas said that a recruitment freeze instituted by the company last year had already resulted in a 6% reduction in headcount across the business.

Barratt said it would continue to rein in its land spending in the year ahead, after actually reducing its land holdings over the 2023 financial year on a net basis by walking away from agreements, adding that 鈥渓and prices have not yet adjusted to the changed market conditions.鈥� It said it expected construction inflation to abate from between 9-10% in the last year to around 5% this year, and would likely reduce its construction activity to align build rates with sales activity. Barratt reduce its rate of build from 352 to 322 homes per week in the 2023 year.

Analyst house Investec said that while the results were in line with expectations, the outlook appeared 鈥渃autious鈥�. Aynsley Lammin, equity analyst at Investec, said in a note that 鈥渨e would not expect consensus financial year 2024 profit to change materially today with the tone on the outlook comments remaining very cautious.鈥�