More homes completed as builder sees demand soar
THE number of homes put up by Britain’s biggest housebuilder was up a third in the last 12 months as UK housing demand soared following the first Covid lockdown.
Barratt Developments said huge growth in the market and growing margins contributed to a 66 per cent jump in profits.
The group built more than 17,200 homes in the 12 months to June 30 – compared with 12,600 the previous year.
The latest figure was only slightly down on the number of new homes it built in 2018-19 – before the pandemic temporarily brought construction to a stop – and it still has plans to reach 20,000 new homes a year.
Average private sales prices rose to £325,500, compared with £310,600 a year before and £312,000 a year before that.
Barratt, based in Bardon, recorded overall sales of £4.81 billion, up from to £3.42 billion, while pre-tax profits hit £812 million, up from £492 million last year, but still down on the £910 million reported in 2019.
Group chief executive David Thomas said: “We have made excellent progress this year thanks to the resilience, flexibility and hard work of our employees, subcontractors and suppliers, who have also continued to deliver the highest standards of quality and service.
“We have begun the new financial year in a strong position and, while there are still uncertainties ahead, our strong balance sheet, forward order book visibility and construction activity to date all stand us in good stead.
“There is very strong demand for houses across the country and we play a crucial role in providing the high-quality and sustainable homes this country needs.
“As we work towards our medium-term target of growing completions to 20,000 homes a year, we are committed to doing so as the leading national sustainable housebuilder – building homes which have a positive environmental, social and economic impact today and into the future.”
In its annual results the business – which includes Barratt Homes, Barratt London, David Wilson Homes and the Wilson Bowden commercial property builder – said gross margins for 2020-21 were 21 per cent, compared with 18 per cent in 2020, and almost 23 per cent the year before that.
Barratt, which was founded in Newcastle in 1958, had £1.3 billion of cash in the bank on June 30, compared with £766 million two years before.
Mr Thomas said it was playing a big part in the government’s target to build 300,000 homes a year and was looking at new ways to support buyers as Help to Buy draws to an end, including the Deposit Unlock Scheme, which offers a 95 per cent mortgage with a UK mainstream lender.
Barratt Developments share price was down slightly on the announcement, which Joshua Raymond, a director at financial brokerage XTB, said could reflect a slowdown in the housing market.
He said: “This is a strong set of results for the period and shows clearly the firm benefited from the rebound in demand for homes from the pandemic.
“The somewhat muted share price reaction tells more of a story that these results had been priced into its shares already after the firm reported in July that yearly profits would be slightly higher than consensus.
“Shares have rallied more than
9 per cent in the past six weeks.
“One thing to keep an eye on is net reservation rate, which has dipped 11.7 per cent since the start of July compared with post-lockdown at the start of the year, which may indicate a cooling of demand for the broader UK market.”