Barratt predicts “significant improvement” as help to buy boosts housebuilding
Barratt is showing no signs of suffering from the slowdown in property sales, with the housebuilder today confidently forecasting "a significant improvement in performance for the full year" thanks to help to buy.
The figures
The 19 weeks to 8 May have been "strong", with total forward sales, including joint ventures, up by 9.7 per cent to £2,8bn.
Net private reservations per week averaged 274 – a drop on the 289 recorded in 2015 – resulting in a "modestly improved sales rate" of 0.75 net private reservations per active outlet per week.
The sales rate in the last 11 weeks since Barratt's interim results was up 3.9 per cent to 0.79.
Barratt has launched 51 new developments in the period, operating from an average of 376 active outlets.
"While the strength of our sales rate has meant we have sold through developments faster than anticipated, we still expect to see controlled growth in outlet numbers in FY17," the firm said.
"We continue to see upward momentum on private average selling prices, predominantly benefitting from mix changes."
Barratt is targeting a minimum ROCE of 25 per cent by FY17, it expects to produce cash returns of £678m over two years to November 2017, equal to £1bn in dividends paid out over the three year period to November 2017.
Why it's interesting
New builds in certain parts of the market might be going off the boil, but Barratt believes its segment will continue to be strong, with improved government support for building new houses through schemes such as help to buy meaning it has been able to secure more land.
Barratt expects to approve between 21,000 and 23,000 plots, up from fewer than 17,000 last year.
"The market remains positive and we expect to enter the new financial year with a strong forward order book," Barratt said. "We are confident the group will deliver a significant improvement in performance for the full year as we continue to execute our strategies: aimed at ensuring disciplined growth, improving key financial metrics through a focus on efficiency and the continued delivery of attractive cash returns."
What Barratt said
Chief executive David Thomas said: "I am pleased with the strong performance of the group in the period, both in terms of delivery for FY16 and in looking further ahead. We have approved the investment of over £4.8bn in land for new housing in the last five years and we continue to be committed to helping increase the number of new homes built across Britain.
"We remain on track to deliver the expected improvement in performance for the full year as we maintain our focus on disciplined volume growth, improving our key financial metrics and delivering attractive cash."
In short
Barratt is confident about opportunities against the backdrop of greater government support for housebuilding, shrugging off concerns about a slowdown in certain parts of the market.