Barratt bullish as homebuyer demand remains resilient
Housebuilder Barratt Developments has notched up a 24% hike in sales since July as homebuyer demand remains strong since the coronavirus lockdown.
The group said it agreed sales on 4,032 homes between July 1 and October 11, up from 3,252 a year earlier.
It expects to see a rise in completions to between 14,500 and 15,000 this financial year, with another 650 from joint ventures.
Barratt chief executive David Thomas hailed “continuing strong customer demand” as the UK property market enjoys a mini-boom since lockdown, boosted by a stamp duty holiday on houses worth up to £500,000.
House prices enjoyed their biggest annual rise for more than four years in September, according to the latest Halifax index.
The data last week showed prices jumped 7.3% annually in September to £249,870 and rose 1.6% month-on-month.
But experts have warned that the boom may fizzle out as unemployment picks up and the stamp duty break ends next spring.
Barratt gave a bullish outlook for new homes, confirming a total forward book of £3.65 billion, up nearly a fifth on a year earlier.
It said: “Whilst there continues to be economic and political uncertainty, the group is in a strong position.
“We have a substantial net cash balance, a well-capitalised balance sheet, a healthy forward sales position.”
It said high loan-to-value mortgage deals had dried up for homebuyers amid the pandemic, meaning many first-time purchasers are reliant on the Government’s Help to Buy scheme.
More than half – 51% – of all private sales reservations used Help to Buy since July 1, of which 74% were first-time buyers, according to the group.
But Help to Buy is due to come to an end on March 31 next year, when the stamp duty holiday also comes to a close.
Barratt said it had ramped up building work to offset the impact of temporary site closures during lockdown, with 33 new developments launched since July.
It is working towards a target of building 20,000 homes homes annually within the next few years.
Richard Hunter, head of markets at Interactive Investor, said: “Barratt continues to capitalise on those factors within its control, ahead of the darkening economic clouds.”
He cautioned: “The availability of high loan to value mortgages has suffered post-pandemic, while the general outlook for the UK economy is currently bleak, with stuttering Brexit negotiations compounding the effects already being suffered as a result of Covid-19.”