Barratt Developments has said sales have picked up and it will meet City profit expectations, with the UK’s largest housebuilder adding to signs of a recovery in the residential market.
Like rivals, the FTSE 100 company saw trading impacted after the aftermath of September’s mini Budget sent mortgage bills jumping, and on top of that a cost of living crisis has hit demand.
In February Barratt reported early signs of recovery in reservation rates, and chief executive David Thomas has now said: “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 £876.8 million.
The update comes in the same week that lender Nationwide said that while annual house price growth remained negative in April at -2.7%, there were tentative signs of a recovery with prices rising by 0.5% during the month.
In a trading update for between January and April 23, Barratt said: “Reservation activity 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 company said it has fully forward sold its full-year order book to June which stood at £3 billion as at April 23. That is substantially down on £4.5 billion recorded a year earlier, and completed home sales for the full year are set to be between 16,500 and 17,000, down from nearly 18.000 in the year to June 2022.
The slump comes after the sharp reduction in reservations in the final quarter of 2022, and the impact of the closure of the Help to Buy scheme.
Barratt is among those that will be waiting to hear if a report that the government is examining proposals to resurrect Help to Buy comes to anything.
