Shares in Barratt Redrow fell by as much as 13pc in early trading - Chris Ratcliffe/Bloomberg

One of Britain’s biggest housebuilders has warned of weaker-than-expected sales as buyers shun London.

Barratt Redrow (BTRW.L) sold 16,565 homes in the year ending June 29, falling short of a forecast of between 16,800 and 17,200 that it had set out in April.

The developer cited “fewer international and investor completions than expected” in London, adding that “homebuyer confidence remains fragile and mortgage rates remain high compared to recent years”.

The housebuilder stated: “The London housing market has been particularly challenging with weak demand from both domestic and international homebuyers.”

London’s housing market has slumped after the Chancellor ended stamp duty discounts in April. Mortgage rates have also stayed higher than expected, which has dented affordability. These have resulted in a wave of price reductions across the capital.

Shares in Barratt Redrow fell by as much as 13pc in early trading before recovering to around 8pc in the mid-morning. Around £778m has been wiped off its value.

Barratt Redrow said it expected to sell between 17,200 and 17,800 homes in its 2026 financial year, reflecting “revised expectation of broadly flat average sales”. None the less, it noted that mortgage market competition and availability have improved.

The bill for repairing safety defects on high-rise homes, required to avoid another Grenfell-style cladding disaster, has also risen by around £98m to total £248m after discovering issues at buildings within its southern division and at a large London development. It said it will pursue its subcontractors to recover those costs.

However, the developer said it will deliver profit in line with market expectations, which will be shared in future trading updates.

David Thomas, chief executive, said: “Although demand during the year has been impacted by consumer caution and mortgage rates not falling as quickly as hoped, there remains a long-term structural under-supply of housing in this country.

“We remain confident in our medium-term ambition to deliver 22,000 high-quality homes a year, and in the long-term demand for our high-quality homes.”

The news comes after findings by Molior showed sales of new-build homes in the capital plunged to their lowest level since the global financial crisis.

The decline, which was more pronounced over the past three months, was blamed on the insufficient financial incentives for property developers to build new homes and for buyers to acquire them. This has led to fewer developments and sales.

Last week, rival housebuilding giant Vistry (VTY.L) posted a profit drop of a third to £80m for the first half of the year, after issuing a string of profit warnings in recent months. It reported 6,800 home completions for the six months ending June 30, down from 7,792 in the previous year.

Vistry cited sluggish demand from its affordable housing partners on the back of funding constraints and uncertainty ahead of the Chancellor’s June Spending Review, but outlined its hopes that the Government’s £39bn affordable homes strategy will boost its business.

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