House builder Barratt on track for strong second half

The FTSE 100 firm said it predicts pre-tax profits to rise 7 per cent to around £315m for the six months to the end of December, driven by “robust consumer demand”.

The developer said completions outside London had hit their highest level for nine years at 6,813, up from 6,784 for the six months in 2015.

However, total completions fell 6 per cent to 7,180, triggered by a 56 per cent drop in completions across the capital to 367, as the firm’s planned building schedule had an impact on the availability of wholly-owned sites. The group said it was in a strong position for the second half of the year after seeing total forward sales rise 15.8 per cent to £2.3bn.

Chief executive David Thomas said the fundamentals of the housing market were robust and the firm was focused on delivering “attractive shareholder returns”.

“This has been another good half-year for the group,” he added. “Consumer demand is strong, benefiting from good mortgage availability and ongoing Government support.

“Our healthy forward order book and this strong demand leaves us on track to deliver on our volume guidance for the full year. Barratt’s continued commitment to quality design, build and excellence in market-leading customer service is reflected in our strong performance and ensures we remain a housebuilder of choice.”

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said Barratt should continue to benefit as there is little sign of an overall slowdown in the UK property market.

“Completions in London are down more than 50 per cent in the first half. That may be primarily due to Barratt’s build schedule, but the fact that it has had to cut prices and complete bulk deals suggests that there are underlying problems in the housing market as well.

“Those worries are weighing on the shares today, but fortunately Barratt is a lot more than a London builder.

“Even last year London properties accounted for less than 12 per cent of total completions, and with completions outside London at a nine-year high today, the rest of the market shows little sign of slowing.”

He added: “Barratt is remaining cautious in the face of Brexit-related uncertainty. But with interest rates low and home ownership still a key aspiration for many Brits, if Barratt builds, it seems likely the buyers will come.”

Last week, Barratt Developments Yorkshire West, which includes both Barratt Homes and David Wilson Homes, announced plans to open seven sites in 2017, creating 900 homes.