Hello, and welcome to Barratt Redrow plc trading update conference call. My name is Suzanne, and I will be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen-only. However, you'll have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand over to your host, David Thomas, CEO, to begin today's conference. Thank you. Thank you, and good morning, everyone. I'm joined this morning by Stephen and Mike and, of course, John Messenger. Whilst it's only five weeks since we last spoke, clearly we would all recognize that a lot has changed in this period. We decided that we would hold a call this morning with the trading update. We have continued to see strong levels of customer interest across the country, and this is evidenced in leads per active site. However, potential buyers have proved reluctant to move forward with a purchase commitment. As a result, our net private reservation rate per outlet per week was 0.55 in the period, 35% below the 0.85 rate in the same period for FY22, and 23.6% below the equivalent period in FY20. You'll see in the appendix to our statement that our net private reservation rate since the last update, which was to the 28th of August, that since that period, our net private reservation rate has reduced to 0.48, a decline of 46.7% on what was clearly a strong reservation trend in the prior year. This clearly reflects the response of potential home buyers to increased wider economic uncertainty with cost of living concerns around energy and inflation, and that has been compounded by increased mortgage rates and reduced mortgage availability. Our reservation rate at lower levels also reflects, as we said in September, limited availability of homes for early occupation, clearly given the strength of our forward order book, as well as now a 900 basis point decline in the share of reservations using Help to Buy when compared to the same period last year. Against the softer reservation backdrop, we have, however, seen continuing robust underlying house price inflation, with pricing on reservations taken in the period continuing to register year-on-year improvements and slightly ahead of our own plans. Our average sales outlets in the period at 351 were 3.8% ahead of the 330 a year ago. The increase in the average outlets reflecting two factors. Firstly, a solid flow of new site openings with 25 opening in the period, and secondly, slightly slower sales rate, which has naturally extended the sales life of sites. We continue to expect sales outlet growth of around 3% for FY23. Total completions at 3,608 were 2.5% below the equivalent period last year, but very much in line with our budget plans. Our site teams and subcontractors have continued to improve our build output, which increased to 367 equivalent homes per week, up more than 9.5% on the 335 in the prior period. Our teams have delivered this growth in output without compromising customer service or build quality. We exit the year with total build cost inflation running at between 9% and 10%, and we continue to expect this rate of inflation for the year. I'm also pleased to report that we haven't seen any significant supply chain issues year to date. Turning now to the land market and our approach in what are less certain times. We have maintained our disciplined approach to acquiring new land in the period. The elevated level of competition in the land market that we discussed back in September has continued. We are being increasingly selective in land opportunities on which we are prepared to bid, and we continue to rigorously apply our minimum 23% gross margin hurdle and 25% return on capital employed. Reflecting this market backdrop, we've approved just 813 plots across three sites in the period, which is sharply down on the 3,735 plots across 15 sites in the prior year period. With our existing land bank strength, the increased uncertainty in the sales market and the highly competitive nature of the land market at present, we now expect land approvals will be substantially below replacement levels in FY23. To conclude, firstly, we all have to recognize the outlook is clearly less certain with the availability and cost of mortgages critical to the long term health of the U.K. housing market. We have seen some stabilization in the mortgage market in recent days, but mortgage rates have moved materially higher and we will see over the coming weeks how this impacts our sales activity. Based on our completions to date, our strong forward order book and current market conditions, we expect wholly owned completions will be in line with those reported in FY22. Notwithstanding the adjusted completions guidance through also seeing improved pricing, we remain on track to deliver current consensus profit. With our strong financial position and substantial net cash balances, the board has confirmed its commitment to the GBP 200 million share buyback program announced on the 7th September. To date, we have purchased 10.6 million shares for an aggregate amount of GBP 39.9 million. Beyond the existing GBP 200 million buyback program, the board will continue to evaluate the group's future capital allocation as market conditions evolve. Finally, we remain very vigilant, and we will respond to further changes in the market and the wider economy as they develop over the coming months. Thank you, and we will now be happy to take questions. As a reminder, if you'd like to ask a question on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. The first question comes from the line of Aynsley Lammin of Investec. Please go ahead. Thanks. Morning, everybody. Just two questions from me, please. Just firstly on the land, I think you'd guided to GBP 1.2 billion of cash spend on land and then a net cash at the end of the year of around GBP 800 million. Presumably, some of that's kind of already committed, but as you've kind of, you know, reducing that land approvals this year, what should we expect the benefit to be versus that GBP 1.2 billion spend? Any guidance at the kind of end of the cash balance? Presumably that will be the difference given that PBT, you know, is still guiding for where consensus is. Then second question, just on recent kind of trading, maybe a bit more color if you could please, just around cancellation rates. Have you seen a big step up on cancellation rates? Just on the price inflation, I mean, you know, given where sales rates are you seeing zero price inflation? Is there a bit more pressure, more use of sales incentives, you know, currently? As you progress more into the autumn selling season, what you'd expect there on pricing? Thank you. Aynsley, hi, good morning. If I kick off in terms of sort of trading cancellations and price inflation, and then Mike will pick up in terms of land spend and net cash. I think, Aynsley, just by way of overview, I touched on it in the introductory statement, but to say, I mean, it clearly has been a fairly extraordinary time. I mean, we announced on the 7th September, we obviously saw the terrible events around the Queen and us going into a period of mourning. Then going into the mini budget and all the events relating to the mini budget. I think when you stand back and look at that, what we've seen in terms of step up in cancellations has been quite limited. Having said that, it is a relatively short trading period. You know, we're covering a five-week period, and clearly markets are still settling. You know, we've seen statements yesterday from the Bank of England, and markets are still settling. We're also reporting a net reservation level, therefore taking account of the effect of cancellations. Within that, we're seeing two things. One is a slight step up in cancellations, and the other is a reduction in the gross reservation levels, which are both feeding into net reservations being down 47% across the period. In terms of price inflation, I would say pricing has held firm. Now, I think we've got to recognize that people have been waiting to see how the autumn trading season unfolds, and that was very much what we said in September. The reality is that to date, the autumn trading season has clearly unfolded in a negative way. Therefore, you would expect that you would see more pricing incentives coming into the market. Whether that be, contribution towards mortgage costs or contributions towards stamp duty and the like. I would certainly expect there to be some tick up in terms of, incentives within the marketplace. Great. Just one follow-up, if you don't mind. Just on the kind of, this reservation rate just below 0.5 times, I mean, could you just remind us. What would you kind of consider to be a normal reservation rate for autumn selling season? Obviously, it's been anything but normal the last couple of years, but just, some indication on that would be great. Thanks. Well, I could sort of go through lots of different comparable numbers, but I think the reality is that if you go back to our financial year 20, we are clearly competing against the period that was prior to COVID, and we've disclosed those numbers this morning. In the short 5-week period, we're down by 34% against those more normal trading levels, and we're down by 47% against elevated trading levels. I think whatever way you cut it, the market is down very substantially. That's very helpful. Thank you very much. Aynsley, let me just pick up on the land point. You're right, we were guiding to GBP 1.2 billion at the year-end. Just to break that down a little bit, around GBP 450 million of that was contractually committed in the land creditor, at the end of last year. We were expecting something between GBP 500 million and GBP 600 million to come through from the land approvals that we made during the course of last year. I think, you know, the scope for reduction in that number is probably around GBP 200 million, at this stage. In terms of what that means for the year-end cash guidance, at the moment, we're holding that at around GBP 800 million. Obviously that saving that we're making on the land spend will be offset by a reduction in revenue from the reduced completions guidance. So broadly speaking, I think we'll still end up more or less in the same place. Okay. Thank you. Thanks, Aynsley. The next question comes from the line of Ami Galla of Citi. Please go ahead. Yeah, thanks. Just two questions from me. The first one, just on the overhead costs and how should we think about it going forward. Are there any initial cost actions that you're considering given the tighter mortgage backdrop now? The second one is on labor cost inflation. Have you seen any changes? I know it's quite a short period of trading that we've looked at, but have you seen any initial signs of changes in the labor cost inflation? Amy, hi, good morning. Yeah, I mean, if I pick up both of those points. I think first of all, just to put it in overall context, that we feel that we have a well-rehearsed plan for market conditions being weaker. A plan, you know, originally very much around coming out of 2008, 2009, but then we faced a shock to the market at the time of the referendum, and again at the time of COVID, and we, in both cases, implemented the plan. I think it's not something that is going to short term have any significant impact in terms of overheads. It's very much about ensuring that we're not, you know, continuing to recruit where we feel that it can be justified not to do so. We're obviously looking very closely at the land market, looking closely at any discretionary expenditure. None of that is gonna feed into a significant short-term reduction in overheads, i.e., if you look over the next, let's say 9-12 months. In terms of labor, the reality is that we're still seeing relatively high levels of employee turnover within the industry, and I think all house builders are experiencing that. It still remains a competitive market in terms of employment. That clearly we then have layered on top of that a cost of living crisis that we have responded to, and I think we will need to continue to respond to in terms of ensuring that our employees are protected, as much as we can within the cost of living crisis. We would expect to see ongoing labor inflation, and our labor inflation rates have perhaps been running at, you know, 5%-6%, something in that order. Thanks. That's That's helpful. Thank you. The next question comes from Chris Millington of Numis. Please go ahead. Hi, gents. Thanks for taking the question. I just wanted to know if down valuations are featuring in any material way at the moment. That's the first one. Second one, I appreciate it's a very short trading period you reported on, but have the sales rate trends been fairly consistent over this five-week period, or are we seeing any improvement or deterioration there? The final one is just about where you are in terms of signing up to the Building Safety Fund and what your considerations are there. Chris, hi, good morning. Just to make it clear, Chris, we were always gonna take your call. Yeah, look, just in terms of down valuations, I mean, look, I think the short answer is that there's not been anything significant in terms of an uptick on down valuations. The reality is we've seen a slight increase on down valuations. We had seen slight increases if you look over the last, say, six months. It's kind of around the edges. I mean, as I touched on in the overview, we have seen a very firm pricing environment. As you know, you know, down valuations from the banks have, you know, perhaps been running on, you know, one in 25, one in 30 transactions. Whereas at, you know, very bad times in the market historically, we might have seen that on one in four or one in five. I don't think at this stage, down valuations is a feature. I think when you look at it across the piece, and bear in mind that, you know, we're talking about a substantial reduction in reservations over a five-week period, I don't think there's any part of the country that you would call out and say, "Look, this area is materially better or materially worse." Overall, we're clearly down, substantially. In relation to the Building Safety Fund and building safety position, we signed the pledge along with, I think, 44 other developers back in the spring. We said at the time, you know, we're absolutely committed to get ourselves into a position that we sign the subsequent legal agreement. There is an ongoing discussion with government, which is being led on behalf of the industry by the HBF. I have no doubt that that will result in us signing a legal agreement. Clearly that will take a little bit of time for us to get into a position that that agreement is finalized. That's helpful, David. Just quickly to come back on the last five weeks of trading, has that been quite a consistent trend, that sort of -30% year-over-year? Yeah. I mean, the five-week period we're at minus 46 and a bit. Sorry, minus 40. Yeah, sorry. Yeah. I mean, just to say on that I think that we saw a deterioration in that trend post the mini budget. I mean, I think when you look at the backdrop, that's hardly surprising. As you know, through the first, the period up to the end of August, we were down by 27, and we probably saw something that was reasonably consistent with that. Then we hit the mini budget and it was down very dramatically. You know, we're now in a position, which I appreciate is what we said in September, but it's the reality, is that we've now got to look at, you know, how does the market perform over the next six or eight weeks in the run up to Christmas. I mean, clearly we are hopeful that we will see some recovery in terms of the trend. To do that, we're also gonna need to see a stabilization in terms of the mortgage market. That's gonna be the absolutely key thing, is gonna be pricing, the certainty of pricing and availability of mortgages. That's very clear. Thanks, David and the team. Thank you. Next question comes from the line of Harry Goad of Berenberg. Please go ahead. Yeah, good morning. Thank you very much for taking my question. Can you just talk a little bit, please, about how you think about sort of trading almost tactically through this market environment? You know, is there such a thing as a target sales rate that you're sort of targeting the regional businesses to hit? With that in mind, just remind us what are the sort of primary levers that the sales teams will be pulling. I guess the final part of that is how do you think about PX, and do you think PX will become a bigger part of the proposition in the next sort of six months or so? Thank you very much. Okay. I mean, if I just run through that. Look, I think we would recognize, and if you look at our commentary over the last three years, I think we have consistently said over the last three years that we do not expect our growth to come from an increased rate of sale. Over the last three years, we have seen an increasing rate of sale. I think we have to recognize that compared to where we were in, say, 2019, that the rates of sale have far outstripped what we would have expected. Now, it's difficult for me to say annually, you know, do we think that the right position is 0.65 or the right position is 0.7 per annum? You know, and we could probably have a bit of a debate around that. The reality is, we've just traded five weeks at 0.48, you know. The point is that our sales are, our reservations are at unusually low levels, and we would certainly expect the business to be trading at something 0.6, 0.6 plus. In terms of what we do, you know, we do believe that we have got a very, very strong sales team. I think we have you know, recognition in the industry that our sales team is very strong, and therefore we're continually going through a process with our sales team of looking at how we're presenting our sites, looking at mystery shopping on our sites, and making sure that everything is in great shape for when the customer arrives. Price is always going to be the last resort. You know, you've got to ensure that everything else is right before you go to price. Price can be an easy option. Inevitably, as I touched on earlier, we will see more pricing offers coming into the marketplace in terms of incentives. With regard to PX, look, I think PX is a fundamental part of our trading model as house builders. The reality is that our biggest competitor is the secondhand market. I mean, the vast majority of transactions take place in the secondhand market. Therefore, PX allows us to provide a much smoother experience to the consumer in terms of being able to buy the secondhand property and allow the consumer to buy our properties. I think that we, you know, we recognize that PX has dropped off dramatically, but there's been two big drivers of that in terms of PX dropping off. One has been a very, very strong secondhand market where the consumer feels that they can handle the sale and perhaps get better pricing on the sale. Secondly, that you cannot combine PX with Help to Buy. Therefore, the PX offer has been less attractive because you're not able to combine it. In any event, even if the market conditions were stronger, with Help to Buy finishing at the end of October, we would expect the PX offers to increase, as we go forward. Fantastic. Thank you very much. Thanks, Harry. The next question comes from William Jones of Redburn. Please go ahead. Thank you. Morning. Just a couple from me. Slightly random, I suppose. The first one was just your customers. What percentage would you say are mortgage-reliant as opposed to cash buyers, please, if you have that number. The second one was just around your gross margins across the land bank. Let's just say it starts at 23% or 24%. Would you have any idea of the spread of those sites from kinda top to bottom as a range? The last one, maybe if I could, was just about how you're thinking about width for sites that are further out. Is that something you'd be, you know, maybe holding back on a bit in the near term, or would you be planning to carry on with investment there? Thank you. Will, good morning. So I think maybe if I start on these, and then what I'll do is just pass over to Stephen to talk a little bit more about work in progress and kind of the process that we go through in terms of work in progress. I think a particular point that Stephen would pick up there would probably be on Part L and the position there. First of all, in terms of customers and mortgage dependency, I mean, broadly, we would have less dependency on mortgages through the David Wilson brand and less dependency on mortgages through Barratt London. Barratt London clearly having a higher percentage of overseas customers and David Wilson having more second or third time movers, who may have very substantial equity within their properties. I think if you look at it in the round, it will be, you know, 80%-85%+ in terms of mortgage reliance. In terms of gross margin, I mean, I sense where that's going, Will. I mean, the reality is we're gonna have a very wide range of gross margins in the sites, ranging from margins that will be in the 40s down to margins that will be single figure. In the overall scheme of things, you can see that the margins that we're reporting, our gross margins for our last reported period, I think we're at 25%. In terms of starting to look at, well, what happens to house prices and potential impairment, my sense is that we have a lot of insulation on that. There will be outliers, unquestionably. If we've got a site that has a very low margin, then that site, if house prices fall 5% or 10%, then that site would be subject to impairment. It, I think, would be a very, very different position from the position that we faced or the industry faced in 2008. In terms of work in progress, before I pass over to Stephen, I would say that the overall principle is that our work in progress is very tightly controlled, and we're looking at sales against build on a site-by-site basis. Stephen, do you want to maybe talk about that? Yeah, yeah, just to expand a bit on that, David. Good morning, Will. Yeah, in terms of width, as David alluded to there, our width is released on a site-by-site and in fact, plot-by-plot basis relative to sales achievement. We don't have a lot of excessive width in progress at the moment. In fact, it'd be good to see further width come through because it will help sales where we have product where we can get people into their homes relatively quickly. You know, currently, vast majority of our sites, if you wanna buy a house, you're looking, like, you know, five, six months away. In terms of other things, we've got, you know, a good level of productivity coming from our sites, as we've mentioned in the announcement there. We've got good headcount. We're getting towards 20,000 traders on our site and clearly keen to maintain that momentum. One of the big challenges we've got in the next nine months is with Part L coming into place in June 2023 on our existing sites. Those sites that don't have foundations in by that point in time will be subject to a further increase in building regulations, which will add around about GBP 3,000-4,000 cost on each unit. We've got a lot of build to maintain and foundations to install over the next nine months to achieve that objective. Thank you. Thanks, Will. Thank you. Thanks, Stephen. The next question comes from the line of Glynis Johnson of Jefferies. Please go ahead. Morning, everyone. I still have four. Apologies. The first one just is in terms of the land market. Forgive me, just to be clear, the caution on the land market, is it coming because the land market is still competitive? Or is it because nerves about what you're seeing ahead? The second question, I'm not gonna do an A and a B, is actually about that land. Can you talk, you talked about the hurdle rates, but I wonder if you can talk about the assumptions you're making into the price, build cost, contingency. How are you reflecting the increased risk of what you might see in the next 12, 24, 36 months? The third question's in terms of leads. I'm interested to know so then maybe why you think they're up, and do they are those leads related to specific homes? Are they just sites? Is there any kind of qualification the customer needs before that lead is registered? The last one, just to get you to repeat, I think what the policy is in terms of capital allocation. You've told us the share buyback will continue, but just in terms of your dividend, how should we be thinking about that given the current context? Glynis, hi. I think Mike will pick up in terms of capital allocation and if I talk through and maybe Stephen can also talk in terms of the land market. If I just start off in terms of land market, as we've touched on many times, and we updated the market five weeks ago, and five weeks ago we were very clear that our land intake was more than we would have expected, and we adjusted our guidance to say that we would be on a replacement rate, coming off guidance that we would be up 20,000 plots. What we're saying this morning is that we will be significantly below replacement rate, and I think there's two factors there. I think the first factor is that we're simply not getting deals agreed. We were not getting deals agreed at a rate which would allow us to achieve replacement. The second factor is that as we've touched on, obviously within the statement and this morning, is that what we've seen in terms of reservation trends, particularly in the last three weeks, but let's say overall in the last five weeks, is just so materially below any land buying assumptions that we feel that you know we need to kind of pause and assess. And you know, that's probably across the market. I mean, I don't think anyone will be seeing anything greatly different from what we're seeing across the market. In terms of our hurdle rates, and the build-up, I mean, there's obviously a lot of different assumptions that go in, but broadly, we're putting in a rate of sale assumption based on existing trends. It's very unusual for us to buy a site where we don't have another site within a relatively short drive distance, and therefore we have current rate of sale trends, and we have current or competitor pricing trends. I mean, whether we're using Experian data or whether we're using Rightmove and so on, we can obviously benchmark current prices. As we've said, prices have held reasonably firm. In terms of build cost, I mean, we are updating build cost on a week-to-week basis. Our systems will give us build cost per house on a week-to-week basis, and therefore we're taking current build costs and feeding that in. We're not feeding in assumptions regarding improving selling prices or assumptions regarding increasing build cost. I mean, we're working on current cost. Then contingency, I'm not going to go into the ins and outs of it, but we've had a very, very standard contingency model over the last certainly 10 or 15 years, where each cost component has a percentage set aside for contingency, and that's just something that we just simply don't vary. It's, I think, stood us in pretty good stead. I mean, yes, you'll get some ups and you'll get some downs, but over the piece, I think our contingency model is pretty reliable. In terms of leads, I mean, it's sort of an interesting one because you know, I think we're clear, Glynis, that you know, we're getting leads, but they're obviously not converting. I mean, I've never been big on reporting kind of, let's say, slightly peripheral numbers, because ultimately it comes down to what is the net reservation performance. What I would say is that when you look at customer interest, inquiries coming across through our website or indirectly to us through other websites such as Rightmove and so on, I mean, the leads are off the scale high compared to what we would have seen in 2020. I.e., in a more normal trading period, we're way up against those levels of leads. That's been well documented by Zoopla, Rightmove, et cetera. The reality is we're not getting the conversion into visits to site or ultimately into net reservations. Nonetheless, I think customer interest in housing is very, very high. Glynis, if I just pick up on capital allocation then. We're not announcing any changes to the current policy which we set out with the half year results. On the dividend, we're progressively reducing cover, so we'll be at two times cover for this year and 1.75 for next. We announced the share buyback a few weeks ago, and we're committed to that. We're nearly through the first tranche of it, as David said earlier. Just stepping back more broadly, the operating framework that we've set out quite consistently targets that we have zero surplus cash after we've accounted for land credits. Again, you know, we're not sort of changing that in terms of the operating model. The only other thing I'd say on capital allocation is clearly the board, you know, reviews that regularly to make sure that we're comfortable with it. No changes in that being announced today. Just to supplement the land, Glynis. In terms of, as David said, what we're finding, competition remains very elevated. It still remains highly competitive. A lot of bids going in on sites. We've become increasingly selective in terms of making sure we're focused on the primary locations. We're applying robustly our minimum hurdle rates. As David mentioned, all our bids are based on very, very latest costs which factor into the latest build cost inflations and our latest revenue expectations. As a result, our net approvals are down. As we sort of expect, levels to be substantially lower than replacement levels. We've seen in some cases, some of the RSL operators have more recently come back into the market and that's sort of fueling some of the bids taking place. That's basically where we are. Thanks. Thanks, Stephen. Thanks, Mike. Thank you, Glynis. The next question comes from the line of Gregor Kuglitsch of UBS. Please go ahead. I guess I'll just have one last, and I guess it's around government policy. I just wanted to kind of get a sense what you're picking up. There's been all sorts of stuff flying around in terms of, I think, investment zones. I heard yesterday about something around sort of perhaps relaxing planning at some of the smaller sites or Section 106 requirements. I guess the question to you is, well, you know, what are you picking up? What do you think is sort of potentially coming down the pipe to perhaps help out a little bit? Thank you. Gregor, good morning. Thank you. I think, you know, it's obviously relatively early days. We clearly have a new Secretary of State Simon Clarke and a new housing minister Lee Rowley. I've attended a couple of meetings with Lee Rowley and, you know, I think he's been very clear that we need to build more homes. I understand there's a debate about should we have top-down targets or should we have bottom-up targets, and so on. I don't think there is any doubt in the government's mind that we need to build more houses. One, because if you look at our housing supply over the last 40 years, clearly the housing supply has been way short of any targets, bottom-up or top-down. Secondly, because the reality is housing is a big, big driver of growth. Therefore, if the housing market is buoyant and we're building new houses, the economic multiplier effect is very, very strong. I think we are getting a very clear message that more houses need to be delivered, and Lee Rowley has said that very directly in public audiences. The investment zones is, you know, a very new policy and is clearly going to take time to settle. I think realistically, investment zones are not going to have any significant impact on the market in the next 12-18 months. The reality is that, you know, we're very much gonna be dealing with a current backdrop, absent investment zones over that time period. Thank you. Thank you. The next question comes from the line of Clyde Lewis of Peel Hunt. Please go ahead. Morning, all. I've got a couple left, I think. One just going back to labor cost and rather your direct labor, David, but just thinking around sort of the subbies and whether you're starting to see them quote more competitively, I suppose, is the way to ask it. The second one was around whether you've seen any change in behavior from the HAs or the RSLs at all in terms of sort of how they are approaching new schemes that might be coming through. Okay. Well, Clyde, hi, good morning. I mean, if I sort of start on labor costs, maybe pass over to Stephen. I think we've said fairly consistently when you look at the inflation mix, we have seen more of the inflation pressure coming from materials than we have done on labor. Stephen's talked previously about the sort of levels of labor that we have on site, and how that compares, you know, over the years. In overall terms, you've got to assume that with less activity, that we will see less pressure in terms of labor costs, would be my sense. In terms of the HAs, again, Stephen touched on it briefly. I mean, we've probably seen much more of the HAs in terms of the land market, and that's been a feature probably perhaps over the last six months or so. In terms of the affordable housing, we've not seen any change. I mean, I think the reality is that if the market is softening, then inevitably the HAs will start looking at pricing and start looking at appetite in terms of 106. Yeah. Yeah. In terms of manning, Clyde, in terms of labor, in terms of the site labor, we've got adequate levels. We've got all the people on site we need to deal with our construction programs. Very much as I said, probably four or five weeks ago, one of the things we've actually seen in the last sort of two or three months is in terms of the groundworker trades, where we've seen a sort of easing in terms of groundworkers, and they've been keen to secure longer term work, and that's been reflected in their pricing. Otherwise, you know, the joiners and bricklayers remain around the sort of same levels, electricians and plumbers, et cetera. About, you know, the same as where we were, you know, four or five weeks ago. Adequate resources available. Okay. You know, the pressure on build cost has been around materials. Okay. Thanks, Rod. Thank you. Thanks, Roy. The next question comes from the line of Alastair Stewart of Shore Capital. Please go ahead. Morning, gents. I had two questions. I think my first question pretty much covers the ground that various other speakers have referred to, but it's more focused on what are you hearing from your potential customers, the ones that had, you know, expressed an interest. Are they sitting on their hands? Are they just scared? You know, are they exiting the market altogether? Are they holding back for maybe a better offer? That's really just anecdotal stuff, if you have it. The second question is, Capital Economics is predicting a 40% fall in housing starts next year. What would happen. Looking at the wider industry, not just you, what would have to happen to see that level of decline in starts? Alastair, hi. Hi, good morning. If I take customers and obviously, you know, you said it yourself, I mean, it's, I think it's sort of slightly anecdotal, but I think that when you look at our customers, they're really falling into three categories. Customers who are first time buyers living at home, first time buyers who are renting or in some sort of house share arrangement, and then second time buyers. What I've said and certainly said in September is that I think that the challenges for us in the marketplace in terms of getting customers to transact, there are two big areas of challenge. I don't believe that interest rates per se is a primary problem, but I would accept that a sudden change in interest rates is very disruptive for the market, which is clearly what we've seen. I think the primary drivers that stop transactions are, one, where people perceive that house prices are going to fall. You can see a lot of commentary around the market now saying that house prices are going to fall. It's not what we have seen to date, but nonetheless, I can see the commentary, and I can understand the kind of theory. The second thing is concern about job losses. While we're in a position where the market is incredibly strong in relation to employment, that doesn't mean to say that people don't have concerns about job losses. Those, to me, if you look over history, have been the two main reasons as to why people will not transact. Therefore, anecdotally, we're hearing people saying, well, no, they just won't go ahead just now. We've also, over the last five weeks, seen people where they have got what they believe is a likelihood of a mortgage at a sensible rate, and that likelihood has evaporated over a short period. Now, we said that the market appears to have stabilized a bit over the last week or so. It may well be that some of those customers are able to reestablish mortgages at competitive rates, and that will allow them to move ahead and transact. I think we have to recognize for consumers that when you look at the rental market, rentals are rising rapidly. Therefore, while mortgage interest rates are rising, it could well be the situation that buying is still more attractive. In terms of Capital Economics, I think that build starts is clearly going to be driven from planning. I mean, a drop-off in relation to initially land transactions, whether it be on a subject to planning basis or whether it be land with planning. My sense is that that isn't going to kick in quickly. That's not something that's gonna kick in from, you know, the first of January 2023. Therefore, for starts to fall by 40% in 2023 sounds to me a little improbable. Clearly starts could fall by 40%, but there's gonna have to be a longer lead time, and you would see it far more clearly in the planning numbers. The planning numbers are unquestionably down, but they're not down that, by that order of magnitude. I think it's unlikely that if people have a planning consent that they will effectively mothball the site and not commence. I mean, unless there are extraordinary changes that take place from here. Thank you, Alastair. Thank you. The last question comes from the line of Andy Murphy of Edison Group. Please go ahead. Morning, everybody. Thanks for taking my question. I had a few but, being last in the queue, they have been answered, apart from this one about sort of corporate activity in this sector. I was just wondering, given the very low valuations now across the sector, what your thoughts were about, potentially Barratt being involved in any sort of corporate activity or whether you can see, others being the focus of other people's attention in that sector. Andy, hi. Good morning. Well, look, I think we've been pretty consistent in terms of our view of, you know, us being involved in terms of us initiating, that we, you know, we're very pleased that we've got three strong brands, so Barratt London, Barratt Homes, and David Wilson Homes. We've consistently said that, you know, we don't feel that we need to acquire another brand. We believe that our strategic one business, in any event, is a strong business, clearly emanating originally from the Wilson Bowden acquisition, and we strengthened that, in our view, substantially through the acquisition of Gladman back in January. From our perspective, we are not in the business in terms of looking at other assets. In terms of other companies or entities looking at the sector, well, we're obviously very aware of that, and we just keep that position under review. We recognize that sector valuations, you know, given clearly what was very recently an extremely strong backdrop, arguably the strongest backdrop that we've seen, there's been a huge reversal in sector valuations, and therefore, we can see that people may see that as being attractive. Great. Okay. Thank you very much. Thanks, Andy. We do have one more question. That question comes from the line of Jon Bell of Deutsche Bank. Please go ahead. Morning, gents. Just on your assertion of flats wholly owned completions for the full year, I just wonder whether you could just comment on what sales rate you assume between now and the year end. Second one would be, have you any sense for how many recent reservations have been at 5% or 5%-6% mortgage rates, as opposed to perhaps lower rates that people were bringing forward? The final one is on cancellations, have you any feel for whether the increase you've seen is being driven by some buyers with variable rate mortgages? I know they're very low in the mix, but they do get hit immediately in terms of the economics. Thank you. Okay. I'll pass over to Mike, and Mike will just talk about assumptions. I think when you look at the subject of mortgages and cancellations, I mean, bear in mind, John, that we don't get this firsthand. You know, we don't have that relationship with the customer. The customer has the relationship with a financial advisor, and therefore, all we will get will be a reason from the customer as to why they are not going to proceed. You know, we won't get mortgage terms from the customer and so on. I think the way that this has evolved is that we would have had a lot of customers in pipeline prior to the mini budget who had a mortgage approval to proceed. Therefore, those cancellations are much more likely to have arisen because they're concerned about outlook or because their chain has collapsed, rather than they've got the wrong mortgage rate. I think, given the relatively short time frames, that's much more likely to be the position. Therefore, customers in the mix just now with 5% or 6% mortgages will be relatively few and far between. Obviously now that you know those are the new rates, and we've clearly got very high rates, for example, on two-year fixed, then now if people don't want to proceed, then we'll see that feeding in as those higher rates become active in the market. John, just picking up on the sales rate point there. I mean, don't want to get into giving specifics on exactly how we model it, but I think if you look at where we are today, we're 64% forward sold on our private sales for the year. Yep. Within that, almost three-quarters have already completed or are exchanged. You know, we have a high degree of confidence around those. What we're assuming from here is that we see essentially a normal trading pattern from our current trading levels. You know, a slightly stronger spring selling season as you would normally expect. And how that translates through into rates is, you know, if you were modeling at a sort of mid to high point fives, through that stronger selling season, then that's, you know, that's the way we're looking at it at the moment. But clearly the market's dynamic, and we'll have to keep that under review as we go forward. Yep. Thanks very much, gents. Thank you. Okay. John, thank you very much. There are no further questions. Okay. Thank you very much, and thank you everyone for dialing in. Thank you for joining today's call. You may now disconnect.