Barratt stays upbeat due to higher prices
SHARES in Barratt Developments rose seven per cent yesterday after the housebuilder said it was on track to report a “significant” improvement in its full-year profit, boosted by higher reservation rates and selling prices.
The UK’s largest housebuilder said the average weekly number of reservations for new homes rose by 25.9 per cent in the period from the beginning of July to 13 November.
This was driven by an increased number of new sites and a higher rate of private reservations, which rose to 0.53 per site per week, up 17 per cent from last year’s “difficult autumn trading period”.
The group has been selling more profitable family houses on land it bought more cheaply since the crisis, helping to push up margins.
The price of an average Barratt home rose by seven per cent to £207,000 in the period.
Chief executive Mark Clare said:
“Our strategy of pursuing value rather than volume, combined with bringing recently acquired higher margin land into production, is delivering a significant improvement in operating performance.”
But Clare warned that unless there is a “significant” rise in the availability of mortgages the industry’s growth prospects will remain constrained.
The builder also revealed that it has shelved plans to sell part of its shared equity mortgage book – a loan issued to struggling first-time buyers – due to “wider macro uncertainties.”