Barratt reviews London prices despite 'robust' UK housing market
Housebuilder Barratt Developments said Britain's housing market remains "robust", but revealed it is reviewing prices in London after softer sales across the capital.
Barratt said that, while the wider UK property sector was "healthy" in spite of Brexit uncertainty, the market for high-end homes in London was "challenging".
"To mitigate these risks we have taken pricing action on a number of our sites in London," the company said.
Across the UK, Barratt reported an average weekly sales rate of 0.74 net private reservations for each active outlet from July 1 to November 13, higher than an average of 0.71 a year earlier.
Total forward sales, which account for joint ventures, were up 4.3% to £2.65 billion.
Chief executive David Thomas said: "This has been another good trading period for the group. Consumer demand is strong, supported by good mortgage availability.
"We are mindful of the potential for economic uncertainty created by the outcome of the EU referendum. However, market fundamentals are robust, and we remain a housebuilder of choice."
Barratt said trading has been in line with market expectations and that it is on track to hit its 20% gross margin target, despite "headwinds" in the London market.
A recent survey by Lloyds Bank found that high-end property prices have dipped in the last two years, partly due to a drop-off in sales at the very top of the market, and there have been some suggestions that stamp duty changes are to blame.
The average home selling for more than £1 million goes for £1,727,327 - less than the average selling price of £1,862,578 in the first half of 2014.
Stamp duty changes introduced in late 2014 made the tax cheaper for 98% of home- buyers - but more expensive for people buying homes at the top end of the market. The tipping point at which the tax became more expensive was if a home was worth more than £937,500.
Some believe tax changes have placed a ceiling on the amount buyers are willing to pay for top-end properties, including those in London.
Barratt made headlines last month after the Metropolitan Police arrested Alastair Baird, regional managing director for the London region, and one other former Barratt London employee following an investigation into alleged misconduct in the process for awarding contracts.
Barratt said it began the investigation in August 2015, which also led to civil legal action against an employee, who was sacked in February this year.
Mr Baird was suspended by Barratt following the arrest.
Commenting on Barratt's trading update, Shore Capital Markets analyst Robin Hardy said: "Generally the commentary on London is cautious in our view, and that is understandable as Barratt still has a material amount of development in central London (West End and City) and demand has slowed and prices are reported to be falling."
Liberum housebuilding analyst Charlie Campbell expects prices to drop further.
"We continue to expect house price falls of 2.5% in 2017 if the economy slows as forecast."