Barratt Reports Strong Performance in Improved Market Conditions

on May 9, 2013
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Barratt Developments (LON:BDEV), Britain’s largest homebuilder by market value, published on Thursday, May 9 an Interim Management Statement, covering the company’s performance in the period from January 1 to May 5.

In its trading update, Barratt said it had enjoyed improved housing market conditions in the period under review underpinned by the recent government initiatives that aim to guarantee billions of pounds in loans to UK home buyers in a bid to boost home ownership and construction. Following the announcement of the government’s ‘Help to Buy’ initiative on March 20 and the subsequent launch of the ‘Help to Buy’ shared equity loan scheme on April 1, Barratt had witnessed an increase in consumer interest and a

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strengthening of sales rates, the group said.
Net private reservations per week per active site rose 18 percent to 0.72. Private forward sales, excluding joint ventures, reached £1.01 billion, up 28.5 percent year on year. Barratt’s private average selling price (ASP) rose four percent, with a higher rate of increase expected for the second half as a whole. “Overall, we have seen underlying prices remain broadly stable with some improvement in the South East,” the company said.

Barratt also announced that it had made good progress with its land investment strategy and had reduced net debt guidance to £100 million for the end of June.
Barratt Developments’ Chief Executive Officer commented: “Our improved performance is being underpinned by stronger market conditions and the operational changes we have made to every aspect of our business. ‘Help to Buy’ has seen a strong start and we are investing in land and bringing it through planning to meet increasing consumer demand.”

**Most Positive Market Backdrop in Five Years**
Many British house buyers have found it tough to stump up the large deposits needed to buy homes and the financial crisis has made banks reluctant to hand out mortgages. According to Barratt, however, the market has been recovering recently and the present backdrop, in terms of consumer demand and mortgage supply, was the most positive the company had seen for five years. Looking ahead, the developer remained optimistic, highlighting good progress towards achieving its key targets.

!m[UK Government Initiatives Boost Homebuilder’s Sales Rates](/uploads/story/2163/thumbs/pic1_inline.png)
**Barratt’s Share Price Opens More Than 4% Higher**
The Barratt Developments share price surged by more than four percent in early trading in London immediately after the release of the trading update. The rise, however, was interrupted by sharp declines. As of 08:47 GMT on May 9 the share price was 319.8p, slightly below its previous day’s closing level of 320.5p, which had valued the company at £3.13 billion.

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