Barratt Development slashes 43pc off property prices**
Deep discount on unsold flats further highlights the perilous state of the UK’s housing market.
The deep discounting has been uncovered by City analysts at Dresdner Kleinwort which visited agents and consultants in Birmingham, Manchester, Leeds and Sheffield.
The investment bank claims to have seen copies of a sales document sent by Barratt Developments’ Yorkshire East division to property professionals offering up to 43pc off specific properties to buyers prepared to buy five or more flats or houses.
Analyst Alastair Stewart said: “Prices of urban apartments appear to have fallen in many cases by 40pc to 50pc, volumes have dried up to virtually zero, many developers have gone bust and land in many cases appears to be worthless.”
He added the investment bank’s visit to the regions revealed “a near-apocalyptic landscape which we believe to be far worse than even the most candid builders have revealed in presentations”.
Mr Stewart said its impressions of the property market – especially of newbuild apartments - “is of carnage beyond even our most bearish expectations”.
Dresdner also reported that the six leading property agents in Leeds have between them sold just six new apartments in two months.
The revelation of the drastic price cuts come after Barratt Developments’ admitted to investors that it planned to manage its stock position and concentrate on generating cash.
It is understood that it offers larger discounts to bulk buyers than to individuals who buy just one home as it costs the company less money on marketing and sales.
Housebuilders have been amongst the worst hit shares this year, with Barratt Developments down 86pc and Taylor Wimpey off 87pc as the housing market crashes.
However, Mr Stewart warned “quoted housebuilders could be forced to issue early profit warnings and are in danger of widespread breaches of banking covenants”.
Oakdene Homes meanwhile warned it is in breach of its covenants with its lenders and “is currently relying on a temporary facility”. The housebuilder said it is in discussions around future banking terms with its bankers.*