Over a 5-year span, the Barratt (and Redrow after the 2024 merger) share price returned a negative 7.37%. Although disappointing, it is significantly better than the share’s 5-year -28.73% return when dividends weren’t re-invested.
For Berkeley the picture isn’t much better, returning -7.97% on a total return basis over 5-years and a -18.91% when dividends weren’t re-invested.
Barratt Redrow prepares to showcase merger integration
As the UK housing market continues its gradual recovery, investors and analysts have awaited Barratt Redrow’s trading update and that of Berkeley Group (originally scheduled for later this week but no longer). These updates arrive against a backdrop of macroeconomic uncertainty, regulatory scrutiny, and an industry-wide pledge to support affordable housing.
When Barratt and Redrow merged in October 2024, the goal was to streamline operations and build up to 22,000 homes annually. The Tuesday 15 July trading update covering the fiscal year ending 29 June 2025 showed solid financial and operational performance.
The Group delivered 16,565 home completions, including joint ventures, though slightly below its guided range due to lower investor and international sales in London.
Nonetheless, adjusted profit before tax met market expectations, supported by early cost synergies from the Redrow acquisition and some margin improvement. Notably, £69 million of cost synergies have been confirmed, with £15 million already contributing to FY2025 results and an additional £45 million expected in FY2026. The integration of Redrow is progressing ahead of schedule, supported by a new divisional structure and a strong year-end net cash position of approximately £772 million.
Looking ahead, Barratt Redrow remains cautiously optimistic amid ongoing market uncertainty. While high mortgage rates and cautious consumer sentiment continue to weigh on demand, long-term structural undersupply in the UK housing market supports the group’s medium-term goal to build 22,000 homes annually. The company projects FY2026 completions between 17,200 and 17,800, including around 600 JV completions.
The management welcomes government efforts to reform planning policy and increase support for affordable housing, emphasising that demand-side support for private buyers is also needed. With three leading brands, a robust land pipeline, and a well-executed integration of Redrow, Barratt Redrow believes it is strategically positioned to scale up delivery as market conditions improve.
Berkeley Group benefits from two-speed market dynamics
Berkeley Group’s next update is highly anticipated after RBC revised its recommendation upward on the stock, citing a two-speed market where Berkeley benefits from demand in its prime regional segments. Market commentary highlights improved enquiry levels and modest upticks in reservation rates.
The company shows sensitivity to potential planning reforms — moves that could accelerate its deliveries significantly. RBC and other analysts have noted that Berkeley’s positioning makes it better insulated against inflationary pressures, labour shortages, and material costs.
These persistent industry-wide constraints continue to affect Berkeley’s peers more severely. The company’s focus on premium markets and strategic locations provides some protection against broader economic headwinds affecting the sector.
Berkeley’s strong balance sheet and land bank position it well to capitalise on any improvement in market conditions. The company’s cautious approach to land acquisition during uncertain periods has historically served shareholders well.
Industry faces regulatory settlement and compliance overhaul
On 9 July 2025, seven major housebuilders (Barratt Redrow and Berkeley among them) agreed to pay a combined £100 million to fund affordable housing. This settlement ends a Competition and Markets Authority (CMA) probe into alleged information-sharing practices, though no admission of wrongdoing was made.
Each firm committed to stronger competition compliance and will finalise payments should the CMA accept the deal by 24 July. This resolution removes an overhang of regulatory risk that has weighed on sector sentiment for months.
The settlement may help rebalance investor sentiment, providing a cleaner runway for upcoming trading updates. Regulatory clarity often proves positive for share prices as uncertainty premiums dissipate from valuations.
Industry analysts view the settlement as drawing a line under past practices while establishing clearer guidelines for future operations. This regulatory reset could support improved sector multiples going forward.
Economic backdrop presents mixed signals for construction
The Bank of England’s Financial Stability Report described the UK’s economic outlook as ‘weaker and more uncertain’, citing global trade tensions and bond market pressures. However, the report noted that the banking sector remains resilient, supporting continued mortgage lending capacity.
Material shortages, especially in bricks and skilled labour, are keeping build-out capacity constrained. These supply-side limitations help support pricing even as mortgage affordability gradually improves with stabilising interest rates.
Labour’s ambitious 1.5 million homes-by-2029 pledge and signals of easing planning regulation have buoyed the sector recently. However, analysts warn that substantive planning reform may not arrive before late 2026, requiring patience from investors.
Current demand signals and trading updates become particularly pivotal for housebuilder valuations given this uncertain timeline. The sector’s performance depends heavily on government policy implementation and economic stability.
Analyst sentiment shifts reflect sector divergence
RBC’s recent sector ratings shuffle downgraded Bellway and Taylor Wimpey while lifting Berkeley and Persimmon, though Barratt Redrow’s positioning remained unchanged. This reflects growing analyst recognition of performance divergence within the sector.
According to London Stock Exchange Group (LSEG) Data & Analytics, the majority of analysts have a ‘buy’ rating for Barratt Redrow, with a mean long-term price target of 563pence (p), 46% above the current share price (as of 14 July 2025).