Sector scrutiny intensifies ahead of November reports
The UK house-building sector is under fresh scrutiny ahead of the upcoming trading updates from two of its major players, Barratt Redrow (scheduled 5 November) and Persimmon (scheduled 13 November).
These reports will provide crucial insights into how the housebuilding sector is navigating challenges from mortgage affordability, planning uncertainties, and building safety costs.
The timing is particularly significant as the sector faces ongoing debate about potential Stamp Duty reforms and evolving regulatory requirements that could affect demand and costs.
Both companies represent different strategic approaches to the UK housing market, making their comparative performance valuable for understanding sector dynamics.
Barratt Redrow shows strength but misses guidance
Barratt Redrow enters the first-quarter (Q1) of 2026 sales and revenue release on 5 November after posting a robust performance for the year to 29 June 2025. Revenue jumped 33.8% to £5.58 billion and statutory pre-tax profit rose 60.5% to £273.7 million.
Adjusted pre-tax profit (excluding purchase price allocation from its merger) reached about £591.6 million, slightly ahead of consensus expectations.
The company completed 16,565 homes, up 18.3% year-on-year (YoY), but crucially fell short of its earlier guidance of 16,800-17,200 homes.
While this indicates considerable momentum from the merger with Redrow, the company flagged that the market remains “quite subdued,” pointing to uncertainties around mortgage availability and affordability.
Forward guidance and merger execution under focus
Accordingly, for the upcoming report analysts will be looking beyond headline numbers toward forward guidance: will Barratt Redrow be able to maintain its medium-term target of 22,000 homes annually?
How resilient are margins given rising safety remediation provisions (which exceeded £1 billion) and land/inflation cost pressures affecting the entire sector?
And how are the merger synergies progressing, with investors keen to see tangible benefits from the combination beyond just increased scale?
The £1 billion-plus safety remediation provision highlights the ongoing financial burden from historical building quality issues affecting the entire housebuilding sector.
Persimmon targets affordable housing segment
On 13 November, Persimmon will publish its third-quarter (Q3) of 2025 revenue and sales update amidst a backdrop of improving early-year trading but still under pressure from macro challenges.
Its half-year numbers showed revenue of £1.50 billion to 30 June 2025, up 14% from the prior year; new home completions numbered 4,605 at an average price of £284,047 (up around 8%).
Underlying pre-tax profit rose about 11% to £164.9 million (versus £149.2 million), though basic earnings per share (EPS) fell 10% to 31.2p.
Persimmon retains its guidance for 2025 completions between 11,000-11,500 homes and expects operating margin to remain in the 14.2%-14.5% band.
Strategic differentiation approaches tested
Attention will now focus on how Persimmon plans to reinvigorate its forward sales and reservation rate; whether its affordable-and-first-time-buyer skew offers resilience in the current rate/affordability environment.
And how rising regulation and input cost pressures might impinge on margins as the company navigates increasingly complex compliance requirements.
Analysts will also gauge how strategic land and integration of manufacturing operations (bricks, frames) are translating into cost control and margin improvement.
Vertical integration provides potential cost advantages but also creates operational complexity and capital requirements that must be carefully managed.
Sector-wide themes dominate narrative
In both cases, the sector’s larger themes – mortgage affordability, planning/tax policy uncertainty (including concerns around Stamp Duty), building safety remediation costs, and consumer sentiment – will colour the earnings narrative.
Barratt Redrow, with its large scale and recently merged operations, will be judged on execution of growth and margin levers.
Persimmon, with a more affordable housing proposition, will be assessed on how much traction it can gain amid a still-challenged market.
The contrast between these two strategies provides valuable insights into which approaches are most effective in the current market environment.
Potential catalysts for sector sentiment
If either company can deliver stronger than expected guidance or evidence of forward momentum (e.g. improving sales rates, cost control, healthy order books), that could shift investor sentiment in the sector.
Conversely, any softness in reservations, margin compression or policy/tax headwinds could weigh heavily on sector valuations.
The forward order book strength will be particularly important for providing visibility into 2026 performance and demonstrating underlying demand resilience.
Policy clarity on Stamp Duty and planning reforms would help reduce uncertainty, though the timing of any announcements remains unclear.
Analyst ratings and technical analysis
Fundamental analysts rate Barratt Redrow and Persimmon as a ‘buy’ and have a long-term mean price target at 1,493 pence, around 23% above the current share price for the former, and a mean price target at 504.81 pence, around 36% above current levels (as of 4/11/2025), for the latter.