Barratt warns of slowdown but rejects rights issue option

Barratt Developments has added its name to the long list of housebuilders reporting a serious slowdown in the property market over the past six weeks, warning yesterday that "market conditions have deteriorated significantly" since the end of March.

The housebuilder, which last year bought its rival, Wilson Bowden, said buyers had reserved an average of 276 properties a week so far this year, a 34 per cent reduction on 2007. However, the figure has fallen to 206 a week since the end of March, with a particularly noticeable decline in buyer interest since then.

Like other housebuilders, Barratt also said it had experienced a sharp increase in the number of cancellations of property purchases since Easter, with the company blaming a sharp decline in the number of mortgage products available, particularly to first-time buyers.

Mark Clare, the company's chief executive, added: "We do not expect to see a meaningful upturn in the housing market until there are improvements in the availability of mortgage finance."

Mr Clare said declining confidence in property was varying across the country, with the Midlands and the West worst affected, while London and the South-east were more resilient. The company's forward order book is now worth £1.56bn, compared with £2.1bn at this time last year.

Barratt said it had no plans for a rights issue, despite speculation that its debts would force it to turn to investors for more cash.

Barratt said it had paid off £200m of an £800m credit facility due for repayment at the end of April and exercised its option to roll the remainder of the debt over until next April. It is in talks with its bankers about converting £400m of the facility into a new two-year credit line and plans to pay off the other £200m by next year through lower than previously expected spending on new land.

Barratt is now expecting total debt at its year-end to be £1.7bn, having previously forecast borrowing of £1.4bn to £1.5bn. However, Simon Brown, an analyst at Landsbanki, said the company seemed to have resolved its most pressing debt problems and had produced a less gloomy snapshot of the housing market than many of its rivals.