Housebuilder Barratt posts record annual profits amid slowdown fears

By Wale Azeez, business reporter
Barratt Developments enjoyed record annual profits last year, as it sold its highest number of homes for a decade.
The housebuilder's annual pre-tax profits were up 9.2% to €835.5m while revenue increased 4.8% to €4.87bn.
Barratt sold 17,579 houses in the 12 months to June 30, a rise of 1.1% on the previous year's sales.The average selling price on completion increased 5% to €288,900 and forward sales were up 11.1% to €3bn.Barratt said market conditions remained favourable and the availability of mortgage finance and the government's Help to Buy scheme continued to support "robust consumer demand".Chief executive David Thomas said: "The group has had another outstanding year delivering a strong operational and financial performance, and our highest volumes in a decade."As the UK's largest housebuilder, we are helping to address the country's housing shortage - creating jobs and supporting economic growth whilst continuing to lead the industry in quality and customer service."Mr Thomas added: "The group starts the new financial year in a good position with a strong balance sheet, healthy forward sales and robust consumer demand supported by a positive mortgage environment."Barratt shares rose 1.8% in Wednesday's trading.
Housebuilder Barratt posts record annual profits amid slowdown fears

Analysts say Brexit, rising interest rates and the possible end of Help to Buy in 2021 are worrying for housebuilders.
Laith Khalaf, senior analyst at Hargreaves Lansdown, put Barratt's record profits in the context of a worried housing market overall.He said: "Barratt Developments has sold more houses at higher prices, and that's led to record profits for the housebuilder."Despite this strong performance, the share price has lost almost a fifth of its value since the start of the year."That's because the market is worried about three things which are out of Barratt's control - Brexit, interest rates and Help to Buy.
"Unemployment is currently at a record low, but clearly there are concerns that withdrawal from the EU may not be an entirely smooth ride, and that puts a dampener on stocks like Barratt, which are plugged into the domestic economy."Barratt's positive outlook comes despite reports over the weekend that Help to Buy will be scrapped in 2021, as well as warnings from rival firms over Brexit.Housebuilder Berkeley has said London's property market remains under pressure from high transaction costs, mortgage restrictions and Brexit uncertainty.Berkeley which operates mainly in London and the South East, said prices continued to be robust in and around the capital, but repeated warnings over "headwinds" affecting the market."These headwinds affect all segments of the market from home-movers to downsizers and investors alike," it said.The comments come after the group repeatedly warned of an expected fall in profits next year.Berkeley, whose AGM is scheduled for Wednesday, is predicting a drop of around 30% following a peak in the year to 30 April, when profits surged 15.1% to €934.9m.Berkeley shares, buoyed by Barratt's update, rose 0.8%.Russ Mould, investment director at AJ Bell said: "Today's latest results from the housebuilders will do little to settle the argument between bulls and bears over the sector.
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"Bulls could point to the solid earnings still being chalked up by Berkeley and Barratt Developments and their relatively depressed valuations."Bears can highlight that Berkeley feels the need to complain about a 'lack of urgency' in its core London market and the fact Barratt's order book is being propped up by affordable housing and joint venture developments, rather than the core private development sales which account for the bulk of its profit."
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