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Barratt expects annual home completions to beat pre-COVID levels on robust demand

Barratt half-year profit rises slightly; demand stays strong
Barratt half-year profit rises slightly; demand stays strong   -   Copyright  Thomson Reuters 2022
By Reuters

-Homebuilder Barratt Developments Plc said on Wednesday it was set to build 250 more homes than its previous annual forecast, which would also cross pre-pandemic levels, dispelling concerns about easing demand in UK’s housing market.

The preference for larger homes suitable for remote working, cheap loans and an extended tax holiday that expired in September have kept the under-supplied UK housing market resilient during the pandemic, although the boom has showed signs of easing over potential rise in mortgage rates.

Last week, the Bank of England raised interest rates for the second time in two months, with nearly half of its policymakers asking for a bigger hike to contain rampant price pressures, a policy move that could indirectly weaken demand in the housing market.

Barratt said it expects total build cost inflation rise to about 6% for fiscal 2022, but added that the overall effect on margin will be neutral or positive for the second-half period.

Britain’s largest housebuilder reported pretax profit of 432.6 million pounds ($586.30 million) for the six months ended Dec. 31, compared with 430.2 million pounds a year earlier. It also announced a higher interim dividend of 11.2 pence a share, from 7.5 pence a year earlier.

The FTSE 100 firm said total forward sales – the agreement reached between the buyer and builder to buy the property at a future date – as of Jan. 30, was 4.11 billion pounds, compared with 3.43 billion pounds a year earlier.

Barratt’s smaller rivals Persimmon and Taylor Wimpey last month forecast strong demand to continue, while midsized players Bellway and Vistry reported healthy trading on robust demand. Countryside Properties unexpectedly reported a weak quarter.

($1 = 0.7378 pounds)