Barratt and Bovis boast signs of housing recovery

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BARRATT Developments and Bovis Homes will this week become the latest big-name housebuilders to report solid trading as measures to reignite the housing market take hold.

The firms have been buoyed by the UK government’s Help to Buy loan scheme, while Barratt has probably also benefited from the MI New Home initiative in Scotland. Bovis has no developments north of the Border.

Both firms will be keen to play down fears that the government support measures risk creating another property bubble. The Help to Buy scheme allows people to buy a home with a deposit as low as 5 per cent.

Last week, Pete Redfern, the boss of rival housebuilder Taylor Wimpey, insisted that a rebound in house prices was not “getting out of hand”, despite sharp rises in some areas of the country, notably the south-east of England.

Barratt, which is the UK’s biggest housebuilder by output, is expected to hike underlying pre-tax profits for the year to the end of June to £182 million from £110.7m a year earlier. Completed sales are forecast to grow to 13,100 from 12,637 in 2012.

Keith Bowman, an analyst at Hargreaves Lansdown stockbrokers, said Help to Buy was likely to have “significantly assisted” the group’s performance.

“Historically low interest rates, prior government initiatives, reduced group financing costs and the use of more recently acquired cheaper land are expected to boost profitability significantly,” he said.

Meanwhile, Bovis, which reports tomorrow, two days ahead of its bigger rival, is expected to reveal a continuing rise in visitor numbers, reservations and forward sales.

Analysts at Deutsche Bank said that by increasing its outlets from an average of 93 sites to a potential of 120 sites it could drive a 40 per cent increase in completions – plus a corresponding hike in profits – without factoring in rising prices.

Government-backed home loans have become cheaper and more widely available with the help of the UK’s Funding for Lending Scheme, which incentivises banks and building societies to boost lending.