Change in sales mix helps Barratt to increase prices

Barratt grew its half-year average selling prices by around 6 per cent to 176,000 as it benefited from a change in the mix of sales towards houses, although growth eased from the 9 per cent reported in November.

Last month's Arctic conditions held back completions as buyers were unable to visit sites, while it said some build projects could not be finished.

However, underlying prices remained stable in the second half of 2010 in cheerier news after lender Halifax said prices dropped 1.3 per cent during December, taking the 2010 decline to 3.4 per cent.

Barratt, which is the UK's largest housebuilder by volume, said 2011 was likely to see sales volumes remain under pressure as the availability of mortgage finance continued to drag on activity.

It added: "We expect changes in mix to continue to drive increases in average selling prices, but at a slower rate during the second half of full year 2010/11, reflecting the strong performance in the prior year equivalent period."

Barratt completed 4,832 sales in the six months to December 31, down 4.4 per cent on a year earlier, with buyer caution also seeing more cancellations and fewer reservations per site.

Its efforts to achieve the best value from sales has been helping drive profit margins despite the tough conditions.

Margins are expected to increase by around 5 per cent in the half-year, up from 2.4 per cent a year earlier. The group is bucking the trend seen in the wider housing market, with its shift in the sales mix leading to an 11 per cent leap in average selling prices for private homes.

Barratt said: "We recognise that the group is not immune to future pricing trends in the wider housing market.

"However, during the period we have achieved stability in underlying prices which is testament to our focus on achieving the best possible prices for our homes. We have seen geographic variation, with relative strength in the South East."

The group is opening around 110 new sites during the six months to June.