SHARE OF THE WEEK

HOUSEBUILDERS were hit by huge disruption in the early days of the pandemic, paralysing construction sites.

But since then a market boom has buoyed developer sales and profit margins, which have been rosy enough to cushion other factors such as rising costs.

Against this backdrop, FTSE 100 builder Barratt Developments is due to provide a trading update on Wednesday and investors will be keen to find out how it is managing.

In particular, they will be looking for guidance on how the company thinks the end of the Government’s stamp duty holiday could impact sales.

Rival Vistry said this week that the market remained ‘strong’ regardless of the tax break’s end. However, recent data from Nationwide suggests the surge in prices is ‘starting to lose steam’.

Barratt completed the sales of 9,077 homes in the six months to December 31. For the full financial year to June 31, it is aiming to have completed as many as 16,250.

At the same time, its average selling price was last said to be £283,500 per home.

Laura Hoy, an equity analyst at Hargreaves Lansdown, said a key factor to watch is whether Barratt is still on course to hit its forecasts for home sales.

Even if it does succeed, completions will still be 9pc below pre-pandemic levels, ‘so a miss would be a disappointment’, she said.

Another warning sign would be if net private reservations per week – 264 in the first half – do not rise.

Barratt’s shares rose 2.5pc, or 17p, to 705.8p yesterday.