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Barratt Developments, Britain’s largest home builder, has forecasted it will make over £ 100million in pre-tax annual profits as it benefits from the booming property market and rushing buyers to complete their purchases before the end of the stamp duty holiday.
The company said strong demand for new homes across the country would allow its full-year pre-tax profits, after items adjusted, to reach around £ 107million for the year through the end of June, slightly above analysts’ expectations.
He also pointed to “a modest increase in the proportion of larger family homes” in his forward order book – a further sign that homebuyers are adjusting their priorities in the wake of the coronavirus pandemic.
The homebuilder said its completion levels rebounded after the construction hiatus during the first wave of the pandemic, with the completion of construction of 17,243 homes in the 12 months leading up to June 30, more provided that. Many more homes were completed than a year earlier, but the figure was slightly lower than two years earlier.
Barratt said its net private booking rate was high and 30% higher than a year earlier, although this was in part due to the comparison to a period when its outlets were closed during the first lockdown. .
The company, which increased its forecast for how many homes it planned to sell this year in January, said it was well positioned for the next 12 months, with 14,334 forward sales, more than the number from the previous two years, with a value of £ 3.5 billion.
Barratt warned, however, that he had experienced construction cost inflation of around 2% over the past year, which has risen to between 3% and 4% currently, due to the continued strength of the housing market and constraints in parts of its supply chain. .
David Thomas, Managing Director of Barratt, said: “Although this period is still uncertain, we are entering the new fiscal year in a strong position and remain focused on our medium term goals, including the delivery of 20,000 homes per year. . “
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Barratt’s results came as the latest cadastral figures showed average UK house prices continued to soar, rising 10% in the year through May, from 9.6% a month earlier.
However, housing market watchers predict that house price growth will slow down in the second half of the year as stamp duty relief is phased out and the supply of new homes increases as the new housing supply increases as stamp duty relief is phased out. that the UK will emerge from the pandemic.
Barratt and other home builders have benefited from the stamp duty holiday, pent-up demand for properties during the pandemic, and the shift to working from home.
Danni Hewson, financial analyst at stock broker AJ Bell, said: “After a period of celebration for the industry, concerns are growing about a possible hangover ahead. For now, rising house prices keep pace with rising raw materials and other construction costs. However, the obvious corollary of this is how a slowdown or even a relative cooling in the real estate market will leave Barratt exposed. ”
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