Market in best state for five years, says Barratt

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housebuilder Barratt Developments said market conditions were the best it had seen for five years and that it expects to post a significant improvement in annual profits.

The company, Britain’s largest housebuilder by market value, yesterday said net private reservations per week per active site rose 18 per cent to 0.72 compared to the prior year after the Government announced plans to help struggling house buyers on March 20.

This contributed to an overall 9.7 per cent increase in net private reservations from January 1 to May 5, it said. Chancellor George Osborne has pledged to provide and guarantee billions of pounds in loans to home buyers in a bid to boost home ownership and construction.

“Help to Buy has seen a strong start and we are investing in land and bringing it through planning to meet increasing consumer demand,” chief executive Mark Clare said.

Many British house buyers have found it tough to stump up the large deposits needed to buy homes and the financial crisis has made banks reluctant to hand out mortgages.

Barratt said the present backdrop, in terms of consumer demand and mortgage supply, was the most positive it had seen for five years.

The favourable conditions have encouraged the developer to increase land purchases, with 17,000 plots expected to be bought in the 2013 financial year, compared with 12,085 in 2012.

The company said its private forward sales, excluding joint ventures, at May 5 was 28.5 per cent up on the same point last year at £1.01bn and it reduced net debt guidance to £100m for the end of June.

Anthony Codling, at analysts Jefferies, issued a buy note and said: “Barratt is the third housebuilder to report a significant increase in reservation rates since the launch of Help to Buy.

“We remain pleasantly surprised at how quickly Help to Buy is actually helping people to buy.

“We reiterate our buy rating on the shares. Following the announcement of Help to Buy and its quick implementation, we continue to see risks on the up- side.

“We will, however, keep a watch on sales rates, which if left unchecked may lead to value being given away to homebuyers rather than shareholders.”