Barratt Redrow Warns of Cost Rises from Middle East Conflict

Britain's largest homebuilder, Barratt Redrow, has cautioned that escalating construction costs and prolonged high interest rates could intensify due to the ongoing Middle East conflict, particularly its impact on global energy prices. The warning came in a trading update on Wednesday, highlighting uncertainties for the company's fiscal year 2026-27 amid soaring oil prices since the conflict began in late February.

The company, formed through Barratt's £2.5 billion acquisition of Redrow in 2024, confirmed it remains on track to meet its financial targets for the current fiscal year ending June 30, 2026. It expects to complete between 17,200 and 17,800 homes, aligning with analyst consensus. Construction costs are projected to rise by about 2 percent for the full year, with inflation holding steady at around 3 percent in the second half through June. However, Barratt anticipates accelerated cost increases in the following year, driven by higher energy expenses filtering into raw materials like timber and steel.

The conflict has triggered a surge in oil prices, pushing up fuel and energy costs worldwide and straining supply chains for building materials. Officials at Barratt noted...