Barratt Redrow feels the chill as London housebuilding crisis deepens
The UK’s largest housebuilder, Barratt Redrow, has issued a stark warning after falling short of its annual sales forecast, highlighting the growing strain on London’s housing market.
In the year ending 29 June, the company completed 16,565 homes, missing its projected range of 16,800 to 17,200. The shortfall is largely attributed to a sharp drop in completions in the capital, where both domestic and international buyer demand has weakened significantly. Persistently high mortgage rates and the end of stamp duty discounts in April have further cooled the market, triggering widespread price reductions.
The impact was immediate: shares in Barratt Redrow fell by as much as 13%, wiping nearly £778 million off its market value before partially recovering.
Despite the downturn, the company remains cautiously optimistic. It forecasts flat sales growth for FY26, with expectations to deliver between 17,200 and 17,800 homes. CEO David Thomas reaffirmed the group’s long-term ambition to build 22,000 homes annually, citing the UK’s chronic housing undersupply. However, challenges persist—particularly the rising cost of repairing safety defects, which has surged by £98 million, bringing the total to £248 million. The company plans to pursue subcontractors to recover these costs.
Meanwhile, new data from consultancy Molior has laid bare the scale of the capital’s housing crisis. In the first half of 2025, just 2,158 private homes were started in London, representing a mere 4.9% of the government’s annual target. The second quarter was especially bleak, with only 731 new starts—half the number recorded in Q1.
Sales are also in freefall, with just 3,950 new homes sold in the capital during the same period—a rate not seen since the depths of the 2009 financial crisis. According to the Centre for Policy Studies, London now has just 427 homes per 1,000 residents, compared to an implied need for 1.1 million additional homes to match European averages. Spokesperson Ben Hopkinson described the situation as “probably the worst housing shortfall in Europe,” blaming a broken planning and political system for bringing the sector “almost to a standstill.”
What does this mean for you?
Housebuilders: Expect continued pressure on margins in London and the South East. The data underscores the urgent need for planning reform and incentives to unlock stalled sites. Diversification into regional markets may offer more stability.
Estate agents: Prepare for longer sales cycles and increased buyer hesitancy, especially in high-value urban zones. Supply constraints may support prices but limit transaction volumes.
Developers: The capital’s chronic undersupply presents long-term opportunity—but only if regulatory barriers can be overcome. Incentives and flexible pricing strategies may be key to unlocking stalled demand.
As the market recalibrates, all eyes will be on how the sector adapts to shifting buyer behaviour, evolving financial conditions, and mounting political pressure to deliver.
Parliament launches inquiry into delivering 1.5 million quality homes
The reformed All-Party Parliamentary Group for Excellence in the Built Environment (APPGEBE) has launched a new inquiry asking: “How can we build 1.5 million quality homes in this Parliament?” The move comes amid mounting concern over the UK’s ability to meet ambitious housing targets without compromising on quality, design, or placemaking.
Chaired by Mike Reader MP, a former Mace director and now Labour MP for Northampton South, the inquiry will gather evidence from industry leaders, stakeholders, and the public. The goal is to ensure that government funding—described as the most substantial in a generation—delivers a lasting legacy of well-built, community-focused homes.
The Construction Industry Council (CIC) is supporting the inquiry, which will run oral evidence sessions through July, with a final report expected in the autumn. Past APPGEBE inquiries have led to significant reforms, including the creation of the New Homes Ombudsman.
What does this mean for you:
Housebuilders: This inquiry could shape future regulations and funding priorities—engagement now may influence outcomes.
Estate agents: A renewed focus on quality could shift buyer expectations and reshape the new-build market.
Developers: The inquiry signals a potential pivot from volume to value—design, sustainability, and community integration will be under the spotlight.
This initiative adds a policy dimension to the current market turbulence, reinforcing the need for strategic alignment between government ambition and industry capability.
Inflation hits 3.6% – What it means for your wallet
Prices in the UK rose faster than expected in the year to June, pushing inflation to 3.6%, the highest since early 2024. The biggest culprits? Transport, food, and clothing. Airfares and international rail tickets surged, while food prices climbed 4.5%, with staples like coffee, chocolate, and meat leading the charge.
Despite average wages rising 5.2%, many are still feeling the squeeze. Rent remains steep, up 6.7% year-on-year, and everyday costs, from meal deals to petrol are adding up.
The Bank of England’s 2% inflation target feels distant, but a rate cut is still expected in August, which could ease borrowing costs. However, savers may see lower returns, so it’s worth shopping around for the best deals.
With inflation possibly peaking at 4% this autumn, the pressure isn’t easing just yet. Whether you’re budgeting for groceries or planning a trip, now’s the time to stay sharp with your spending
