Barratt hopes are building

Housebuilder Barratt Developments yesterday said it expected to return to profit during the second half of its financial year for the first time since 2008.

The group's shares rose 5 per cent after it issued a trading update saying its bottom line had been boosted by a combination of higher house prices and tight controls on costs.

It expects its average selling price to be around 15 per cent higher during the six months to the end of June than for the same period of 2009, largely due to its strategy of focusing on selling houses rather than flats.

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The group is also benefiting from the ongoing pick up in the housing market, with reservations up 14 per cent compared with the first half of its year.

Forward sales are 32 per cent higher than for the same period of 2009 at 1.07bn – the highest level for two years.

Mark Clare, group chief executive, said: "The increase in our selling prices coupled with effective cost control is leading to good margin growth and we expect to deliver a profit for the second half."

But he added that while the market had seen a "measure of recovery", the group remained cautious due to the continuing economic uncertainty and lending constraints.

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The anticipated second half profit contrasts with a loss of 63.5m reported for the six months to the end of June in 2009, and a pre-tax loss of 178.4m during the first half of its financial year, after it took a hit from exceptional items relating to its rights issue.

The group, the UK's biggest housebuilder by volume, said it expected completions to rise to 11,500 units during the full year, around 60 per cent of which would be houses, up from 46 per cent in the previous year.