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Barratt to make further landbank writedowns

Barratt Developments said today it is expecting to make further landbank write downs before the end of the year.

In assessing the level of required write-downs, Barratt chiefs today said it will use site-by-site valuations carried out at the end of December.

In a statement released today the firm said additional write-downs will also be required against the assets of Wilson Bowden.

Barratt also said it would only invest in land where it is contractually committed and said the expected total land spend for the financial year would be lower than the £568 million announced in September.

Chief executive Mark Clare said: “Conditions in the housing market are now as tough as anyone can remember with increasing pressure on prices and margins.”

“Against this backdrop, Barratt’s focused sales effort has enabled us to deliver robust sales volumes, in-line with management expectations”.

The statement said Barratt’s forward order book currently stands at £817.7 million, 43 per cent down from the same period last year.

Private net reservations averaged 197 per week in the 19 weeks to 9 November, equating to 0.36 private sales per week per site, down 23 per cent on the same period last year.

There has been a pick-up since the beginning of September, with private net reservations averaging 233 per week, 0.44 sales per week per site, down 6.6 per cent on the comparable period.

Average selling prices on a like-for-like basis are expected to have fallen by between 15 per cent to 20 per cent at the end of December 2008 from their peak in July 2007.

Increased discounts are exerting continued downward pressure on margins.

Bosses said they expect net borrowings at both the half and full year to be lower than prior year levels and that Barratt will continue to operate within its committed facilities and banking covenants.