Barratt benefits from solid market

BarrattBarratt Developments added to the solid run of results from UK housebuilders as "a period of relative stability" helped it more than double full-year profits.

The group, which owns the Barratt Homes and David Wilson Homes brands, said average selling prices in the year to June 30 were up 1.2% at £180,500 after sales rates remained "consistent" through the year.

Barratt said it was boosted by both lower land prices and Government policy such as the FirstBuy scheme launched in July 2011, which has delivered 1,573 completed sales.

The results come after rivals Persimmon, Bovis Homes and Taylor Wimpey all posted strong profit growth - despite wider woes in the mortgage market, economy and construction sector.

The Leicestershire-based group, which saw shares fall 3% as the group delayed paying a dividend until next year, reported a 159% leap in pre-tax profits to £110.7 million.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: "Unlike consumers, housebuilders continue to benefit from lower land prices.

"The differential between selling prices and land prices - the core industry cost - has widened in recent years, with the likes of Barratt now reaping wider profit margins. The government has also played its part, lending its balance sheet to buying schemes and encouraging banks to lend if possible."

The group said the primary driver of profit growth was the increased proportion of completions on cheaper land bought after the financial crisis.

During the period, 4,381 completions - some 35% - were on this higher margin land, with this rate expected to increase to just over 50% of completions in the current financial period.

Barratt reported a 14% rise in group revenues for the year to £2.3 billion with completions up 14% to 12,637 units.
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