Barratt Developments Plc is the latest homebuilder to hint at optimism in Britain’s housing market after seeing an uptick in sales.
(Bloomberg) — Barratt Developments Plc is the latest homebuilder to hint at optimism in Britain’s housing market after seeing an uptick in sales.
The homebuilder said its average weekly private net sales rate this year through April 23 was 0.65, according to a statement Wednesday. That’s an improvement on the second half of 2022, when the rate was 0.44, but still short of the 0.93 average for the same period a year earlier.
“The economic backdrop remains difficult,” Chief Executive Officer David Thomas said in the statement. However, the company expects “to deliver full year adjusted profit before tax in line with current market expectations,” he added.
Still, the homebuilder warned that first-time buyers were facing a more challenging environment than existing homeowners. Rival developers Persimmon Plc and Taylor Wimpey Plc, which together with Barratt collectively built more than 45,000 homes last year, have both warned of a collapse in first-time buyer sales following the end of the Help-to-Buy scheme.
Barratt said the closure of the Help-to-Buy program contributed to a decline in wholly owned home completions in the first four months of the year. The company also warned that it expects build costs to rise as much as 10% in 2023.
Britain’s housing market is facing disruption as it adapts to more expensive mortgages and a slowdown in house price growth. The impact on first-time buyers has been intensified by the end of the Help-to-Buy scheme, which was introduced by the government in 2013.
While the scheme closed to new applications in October, homebuilders were offered some hope of more government support for the housing market. Labour leader Keir Starmer pledged to revive targets to ensure that the private sector would build at least 300,000 homes a year, while the Times of London reported that Prime Minister Rishi Sunak is considering a new-buyers’ support scheme.
That led to a surge in homebuilder stocks on Tuesday morning, with Persimmon and Taylor Wimpey among the developers posting strong gains.
Regardless, Barratt said it expects to deliver between 16,500 and 17,000 homes this year, which is line with the board’s previous expectations.
“Positive sales rates have been maintained through this period and we are now fully forward sold for FY23,” Barratt’s Thomas added.
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