UK housebuilder Barratt Developments reports a sales pick up and insists it will meet City profit expectations for the year.
In its latest trading statement, the housebuilder explains that the early signs of recovery in reservation rates seen in late January and early February has continued.
Barratt chief executive comments: “Whilst the economic backdrop remains difficult, we are pleased that more positive sales rates have been maintained through this period and we are now fully forward sold for FY23.”
Pre-tax profits for the year to June are expected to meet City forecasts of £876.8m.
Year-to-date forward sales, which gauges near-term demand, stands at £2.95bn, up from £2.67bn reported in January, however this is still 34.4% below year-on-year.
The company shows that construction activity has been adjusted to the slower trading backdrop with 303 equivalent homes (including JVs) built per average week in the period (2022: 359)
The trading outlook for the full year remains in line with the board’s previous expectations with the group on track to deliver total home completions of between 16,500 and 17,000 homes including around 750 JV home completions.
Barratt reveals that for the 12-weeks of trading through to 23 April 2023 net private reservation rate at 0.71 was a further improvement on end of 2022 and early 2023 numbers. (0.30 and 0.49)
‘Reservation activity in the period has reflected the more challenging backdrop for first time buyers but resilient demand amongst existing homeowners, where limited homes for sale in the wider market, the energy efficiency of our new homes and the backdrop of significant rental cost growth, have helped to support demand’ the statement says
It adds that the reservation rate has been complemented by increased multi-unit sales into the private rented sector along with additional private unit sales to registered social landlords, which has mitigated sales risk during the period. The net private reservation rate into the private rented sector, along with additional private units to RSL’s, equated to 0.08 (2022: 0.03) in the period.
Barratt’s cautious optimism on the housing market and house buyer sentiment is to some extent supported by the Nationwide house price index survey released yesterday.
The Nationwide revealed that UK house prices rose by 0.5% in April after falling for seven consecutive months.
The figures add weight to the argument that the property market has stabilised after the 2022 mini-budget fiasco.
