Barratt profits will be better than forecast

Aaron Morby 14 years ago
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House builder Barratt expects to make an full year profit of £85m this year, exceeding city expectations.

But the volume builder warned the outlook for new housing would remain challenging because of constraints on mortgage finance and concerns about the economy.

Barratt said total completed sales fell to 11,377 during the year to June, down from 13,202 a year ago. But average selling price rose 11% to £174,000, leaping around 18% in the second half of the year.

This helped Barratt to lift operating margin to around 5.5%

Barratt, one of the last large house builders to update the market on current trading conditions, said its net debt stood at £375m compared with £1.28bn this time last year.

Mark Clare, group chief executive said: “In the last six months we have driven a significant improvement in operating margin, delivered a profit and reduced debt levels by around £230m.

“This improved operating performance, combined with our success in agreeing terms on higher margin land means we are well positioned to secure further margin growth in what continues to be a challenging market.”

This week the latest Royal Institution of Chartered Surveyors survey found that property surveyors believe house prices will start to fall after a surge in the number of homes being put up for sale.

The survey for June found that 4% more of its members expected prices to fall in coming months than those expecting a rise.

Last month the majority of surveyors were confidently predicting further rises.

The mood swing about future house prices comes as the number of properties coming on to the market in June increased at the fastest rate since May 2007.

Experts believe the flow was boosted by the abolition of the controversial home information packs in May.

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