Barratt Reports Stronger Than Expected House Sales

BARRATT DEVELOPMENTS plc has reported stronger than expected house sales in the second half of 2020.

In its latest trading update, Barratt reported 9,077 home completions in the second half of 2020, up from 8,314 in the same period in 2019 – an increase of 9.2%. The average selling price of a new Barratt home increased by 2.2% to £319,000.

The company says the boost to sales come after a surge in pent up demand after the first lockdown. This was stimulated further by the temporary pandemic Stamp Duty holiday and the March 2021 end of Help to Buy for existing home owners.

Customer reservations of new Barratt homes increased by 11.6% on the previous year during the 2020 Q2.

Barratt House Sales Increase

Despite fewer active outlets in 2020 in total – 342 compared to 372 in 2019 – the year has seen the company launching 63 new outlets which was above Barratt’s expectations. Barratt expects this to sustain its ongoing recovery in its completion volumes in the financial year 2021.

At the end of 2020, the company had increased its forward sales by 14.3% to 13,588 homes at a value of £3,212.1m, 19.4% up on last year. Barratt is now over 90% forward sold for this financial year. The company expects to sell up to 15,750 homes in FY21.

Construction activity was ahead of planned output, with an average of 298 equivalent homes constructed per week. The start of 2021 sees a reduced level of work in progress carried forward for Barratt and, as a result, a greater reliance on construction activity in the half year ahead. The company says it’s continuing to manage the operational challenges created by COVID-19 across its sites.

Land Acquisition

Barratt has approved the purchase of 5,635 plots on 35 new sites in the second half of 2020. It says it is now seeing a greater range of land buying opportunities come to market and has a pipeline of offers accepted on more sites. The company aims for an owned and controlled land bank of around 4.5 years and expects to see increased investment in both land and completions beyond 2021.

Bonus and Dividends

To mark the milestone of completing its 500,000^th home this financial year, an award of 200 shares has been made to all Barratt employees below managing director level for the third year in a row.

The Board expects to agree the resumption of dividends with the interim results on 4 February 2021.

In Autumn 2020 Barrett set a target to make its standard house types net zero carbon in use from 2030.

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