Barratt shares up as strong demand for UK homes continues
07:39, 13 October 2021
UK housebuilder Barratt Developments (BDEV) saw its share price rise in early morning trading in London after it reported continued strong customer demand for its new homes. The announcement came as part of its latest trading statement, which covers the period from 1 July to 10 October.
Barratt’s stock rose by over 3% to £6.61 ($9.01) just after the market opened.
The company said that whilst the net private reservation rate was 2.3% below that reported in the prior-year period, this was a particularly active time. Bookings during that period were being driven by both pent-up demand following the initial national lockdown as well as increased Help to Buy (H2B) reservation activity ahead of the tapering of the H2B scheme in December 2020. Against a more relevant comparative period in 2020, Barratt said that the net private reservation rate was up by 18.1%.
Barratt said that it continued to expect to deliver average sales outlet growth of around 3% in full-year 2022. This would be driven by both site acquisition and land bank optimisation through additional dual branding of Barratt and David Wilson Homes on its sites.
Reflecting the continued strength in reservations, total forward sales including joint ventures (JVs) as of 10 October 2021 totalled 15,393 homes at a value of £3.9bn. This compares with 15,135 homes and £3.6bn in October 2020; and 12,963 homes and £3.1bn in October 2019.
The company said that it was now 71% forward sold with respect to private wholly owned home completions for the 2022 financial year. This is a slight increase over 2021’s financial year when 70% were forward sold.
Supply issues
The trading update said that whilst the challenges around securing sufficient and timely building materials supplies was an issue across the industry, to date Barratt had not experienced any significant disruption to its building programme with its sites continuing to operate successfully throughout the country. The company expects that build cost inflation will reach between 4% and 5% over the 2022 financial year, however.
Commenting on the latest figures David Thomas, chief executive said: “The positive start to the new financial year has continued in recent weeks with private reservations remaining strong. This is particularly encouraging given the significant year on year reduction in Help to Buy reservations and the ending of the stamp duty holiday.
He added: “We continue to work closely with our suppliers and sub-contractors and have not experienced any significant disruption to our build programme as a result of the challenging supply chain environment. We remain on track to deliver both our FY22 and medium-term targets set out in the FY21 results.”
Read more: UK job vacancies hit new record high
Related topics