Home sales are rebounding faster than expected as the UK emerges from coronavirus, according to one the country’s biggest housebuilders.
Barratt Developments is selling homes at a far higher rate than it was a year ago, with orders for 15,660 homes, compared with 13,064 at the same point in 2019.
That has raised hopes for a rapid rebound in the housing market, which was hit hard by the pandemic.
Pre-tax profit at the group tumbled 46 per cent to £492m in the 12 months to the end of June. The company built almost a third fewer homes — 12,604 compared with 17,865 last year — and made less money on each.
The pandemic led to £74m in direct costs, with most of that spent on implementing safety measures. But the crisis took a far larger toll on revenues, which fell 28 per cent to £3.4bn from a year earlier.
David Thomas, Barratt chief executive, said there was reason for “cautious optimism” and that the company was seeing strong demand from customers. Construction work had resumed on all sites by the end of June.
Shares in Barratt jumped 7 per cent in early trading on Wednesday. Other big housebuilders, including Persimmon and Taylor Wimpey were up more than 3 per cent.
Analysts at Peel Hunt said the “exceptionally strong” trading in Barratt’s new financial year meant the builder would probably resume paying a dividend soon.
However, Barratt said it would not pay a special dividend for the year as it raised concerns about the impact of rising unemployment and the uncertain outcome of the Brexit negotiations.
The government’s introduction of a stamp duty holiday, which will save homebuyers up to £15,000, was “an important intervention” said Barratt. The measure, which started in July and runs until March 2021, has encouraged buyers to the market and helped support prices.
House prices in the UK were 2 per cent higher in August than in July, according to Nationwide’s closely watched index, the fastest monthly growth rate in more than 16 years.
Lucian Cook, head of residential research at estate agent Savills, said demand would likely be sustained through the autumn, as buyers with available cash take advantage of ultra-low interest rates and government schemes.
But, he said, “given some of the unwinding of government support and the prospect of tax rises, it is difficult to see how such momentum can be sustained through the remainder of the year”.
Aynsley Lammin, an analyst at Canaccord Genuity, added that while recent trading had been good, “some of that is driven by pent-up demand, stamp duty cuts and people trying to get in [and buy] before Help to Buy changes”.
Help to Buy will be limited to first-time buyers from April 2021, and regional price caps will be introduced to the scheme. That, as well as the end of the stamp duty holiday, meant the bounce in sales might be shortlived, said Mr Lammin.
Barratt also sounded the alarm on the lack of high loan-to-value mortgages available to buyers, which it said was likely to hit demand from first-time buyers in 2021.