HOUSEBUILDER Barratt Developments added to surging optimism around the housing market yesterday as it reported solid profits and sales.
Britain’s biggest housebuilder by volume became the latest firm to report a positive impact from UK government measures to stimulate the market.
Its sales rate for the first half of the year is up 17.9 per cent, with the real boost coming in April with the launch of George Osborne’s Help to Buy scheme, which is providing buyers south of the Border with up to 20 per cent of the price of a new home.
Since then, Barratt’s sales have been up by 34.7 per cent year-on-year.
Chief executive Mark Clare said: “As more house buyers return to the market, supported by improved mortgage availability and the Help to Buy scheme, we are in a strong position to continue to grow the value of the business.”
The Leicestershire-based builder echoed strong trading by peers including Bovis, Persimmon and Taylor Wimpey, which have all reported swollen order books and rising margins in recent days.
Barratt sold 13,663 homes during the year to the end of June, up 6 per cent on a year earlier. The impact of stimulus schemes, which also include measures to ease the mortgage market through Funding for Lending, was much greater on the company’s forward sales figures, up almost 54 per cent at £829.7 million.
The group said it now expects underlying pre-tax profits to beat City expectations by soaring 73 per cent to £192m.
The company is re-investing its profits to grow its land bank and increase its building rate as it anticipates further growth in demand in the year ahead.
Clare said: “We are increasing our investment in land whilst reducing debt and have delivered a performance ahead of expectations. Momentum is continuing to build and with forward sales up substantially, we are confident we can improve our performance still further in the year ahead.”
Barratt plans to hike its output to about 16,000 completed sales per year – but did not say when this will be achieved. However, it expects to keep its network of sites stable at about 381. The houses it builds will increasingly be on land bought cheaply after the financial crisis, offering higher margins, the firm added.
At the same time it is paying down debt and expects to be debt free in two year’s time, although that means its dividend will remain “conservative”.
The builder also announced a 50/50 joint venture with Morgan Stanley Real Estate Investing to build 770 homes worth about £275m in Greenwich, London, close to the O2 arena.