Barratt sees the recovery hitting the North

Barratt has reported a jump in profitsBarratt has reported a jump in profits
Barratt has reported a jump in profits
THE housing market recovery is starting to spread beyond London and the South East, housebuilder Barratt Developments declared yesterday as it hailed a very strong start to the new financial year.

Mark Clare, chief executive of Britain’s biggest housebuilder by volume, told the Yorkshire Post: “Yorkshire is a perfect example of where we are seeing that strength of recovery.”

He said sales in Yorkshire over the last 10 weeks are up 30 per cent against the same period last year.

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Mr Clare added: “That sort of recovery we are seeing in other places. We are starting to see the economic recovery flow through to the consumer.”

Barratt said full-year revenues rose 12.2 per cent to £2.6bn, with completions, including joint ventures, of 13,663 units, up 6 per cent on the previous year.

Average selling prices increased seven per cent to £194,800 in the 12 months ending June.

Profit before tax and exceptional items soared by 73 per cent to £192.3m and the group slashed debt to £25.9m from £167.7m.

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Mr Clare said: “These are significantly improved results and we have had a very strong start to the new financial year.

“Our £2.6bn commitment to land investment since 2009 puts us in a good position to capitalise on these market trends.

“We have already increased our completion volumes by over 20 per cent in the past two years and expect to deliver around 45,000 new homes over the next three years.”

Barratt has three big developments in Yorkshire for 284 units at Northallerton, 425 units at Derwenthorpe in Osbaldwick and 271 units at The Chocolate Works in York.

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Mr Clare added: “Recovery is moving well beyond the South East, we’re seeing some very strong performances around the country and that’s probably the first time in five years where we’ve been able to report that.

“We are seeing some very, very strong interest on new sites that we’re launching around the country, even to the point where we’re starting to see queues, which is not something we have seen for many, many years.”

He added that buyer appetite for Barratt homes was so strong that for some sites it was making five to 10 sales on the day of a scheme’s launch.

Mr Clare said cities such as Aberdeen and Edinburgh in Scotland, as well as Bristol, were seeing particularly high levels of interest.

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“Where we’re opening, people are waiting to get into those new show homes,” he added.

He said housebuilders and planning departments are developing better relationships.

Barratt has also focused on improving the consultation process with local communities, said Mr Clare.

The housing market, which declined following the financial crisis, has revived in recent months thanks to government efforts to ease mortgage lending, as well as a general increase in confidence in the health of the economy.

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While house prices in London and the South East stayed relatively robust through the crisis, prices in other regions continued to fall up to the end of last year, before the Government launched its Help to Buy scheme. A survey on Tuesday showed house prices recorded their fastest rise in almost seven years last month.

The market in Yorkshire continued to improve last month as buyer demand remained strong and the number of homes sold in the region increased, according to a RICS survey.

Anthony Codling, analyst at Jefferies, said: “After a tough time during the credit crunch, Barratt is back to doing what it does best, driving volume, as demonstrated by a 44.4 per cent increase in forward order book.

“In our view, Barratt will be the largest beneficiary of Help to Buy, the policy designed to drive housing transactions, as both Barratt and Help to Buy, in our view, have a common goal.”

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Despite the upbeat tone of Barratt’s announcement, shares fell 4.57 per cent to close at 317.10p.

Mr Codling said: “Barratt’s shares have been weak following the results.

“There is talk of travelling and arriving, however, our view is that we have not reached the destination, but rather a staging post.

“We would take advantage of this staging post and stock up on supplies of Barratt shares.”

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He added: “The group reported that outside of London pricing is firming, or rather use of incentives is reducing and volumes are increasing.

“This supports our view that the regional markets outside of London and the South East will be the real winners of Help to Buy.”

The housebuilder remains the top pick of analysts at Deutsche Bank, who said: “We continue to believe house price inflation offers significant upside potential to forecasts in the coming 12 months.”

Mr Clare said the economic recovery appears sustainable “because it’s much broader than we have seen before.

“It’s happening in every part of the country”.

He added: “Banks are certainly lending more than they were.

“Consumers are feeling better about the economy.”