Housing boost as builders eye profit growth

Housebuilders Barratt and Bovis Homes both said yesterday they expect to report a rise in profit after a pick-up in sales, although activity remains limited by tight mortgage availability.

Barratt Developments, Britain's largest housebuilder by volume, said sales rates returned to normal levels from 1 January to 8 May with private selling prices up 4 per cent, driven by a move to houses from flats. Smaller rival Bovis, which also posted a trading update, said the market had remained stable, with visitor numbers up 20 per cent and sales rates up marginally.

The market for new houses has improved slowly since a weak autumn exacerbated by bad weather in December. Both builders said it was still being held back by a lack of mortgages at high loan-to-value ratios.

Barratt, which announced a new debt facility of about 1 billion until May 2015, said it still expected a substantial improvement in full-year operating profit helped by higher-margin sites and cost controls. It is comfortable with market estimates of about 130 million for full-year operating profit, compared with the 90m it posted for 2009-10.

Panmure analyst Rachael Waring said: "Barratt has reported a robust performance since January, and forecasts look secure for the full year."